Baghdad (AFP)

Without major reforms "within a year", the Iraqi economy will suffer "irreversible shocks", warns the Minister of Finance Ali Allawi, in an interview with AFP Monday.

"Reforms are inevitable," said the 73-year-old academic who has been in the post for a month and a half in a country whose incomes have been cut in half with the recent drop in oil prices and a barrel that has gone from $ 50 to one twenty dollars.

"If we do not rectify the situation within a year, we will suffer irreversible shocks that we will not be able to absorb," he continues, while projections announce a contraction of the Iraqi economy by 10% this year.

Ali Allawi, already in charge of finance in the interim authorities in 2005-2006, believes that the situation is "worse" today because Baghdad is facing "an existential economic crisis".

At the time, the price of a barrel of oil was almost equivalent to around $ 35, but the number of civil servants paid by the Iraqi state was less than a million.

Today, there are more than four million and as many other Iraqis receive pensions and other state pensions, for a monthly amount of about four billion euros.

- Empty and "extraterrestrial" accounts -

Allawi said the government should pay June and July wages on time by borrowing from state banks.

"This is doable to a certain degree, beyond that, we expose ourselves to serious risks," he warns, however.

Faced with these expenses which have only swelled over the years, the government has, he says, found empty coffers, 17 years after the American invasion which overthrew Saddam Hussein and set up a new political system, consumed by patronage and which has placed Iraq at the bottom of the world in terms of corruption.

"A government usually has on its books enough to cover a month and a half to two months of spending in an emergency," said Allawi from his home in Baghdad. "I expected to find between 7.5 and 10 billion euros, there was only a billion and a half available."

Today, for experts - including Mr. Allawi, a time spent by the World Bank -, it is the entire financing system of the second producer of OPEC which must be revised.

For the 40 million Iraqis, it will first go through severe austerity, which may last "up to two years," he told AFP.

And above all, the authorities will sort through the list of civil servants and pensioners, some of whom cumulate public allowances, and withdraw from them "extraterrestrials", an Iraqi slang word used to designate these civil servants whose names appear on the lists of wages to be paid but who never came to their job, fictitious.

- Oil and confidence -

At the government level, long-standing promises to diversify the economy will need to be implemented, so that the country’s destiny is no longer in the hands of the global crude markets and discussions with the World Bank and the International Monetary Fund.

"If the price of oil stays at this level for a year and our spending remains unchanged, we will run into an obstacle: we cannot run a country just by hoping that oil prices go up enough to cover spending," said the spokesman. Slender Iraqi, from a line of Shiite politicians.

But can a complete reform of the economy be carried out by a transitional government, named after the most serious social crisis in the country? This dilemma was known to Mr. Allawi in 2005.

This time, he recognizes, the crisis of confidence between citizens and leaders is consumed after six months of an unprecedented popular revolt and repressed in blood by the previous government of Adel Abdel Mahdi.

And already at the beginning of the month, when the pensions were punctuated - the first act of austerity to which the government has returned -, the outcry was unanimous against Mr. Allawi and Prime Minister Moustafa al-Kazimi, even within Parliament, the body on which he nevertheless relies to approve the reforms.

And above all, to launch the fight against corruption, which has already swallowed up 410 billion euros of public funds since 2003.

© 2020 AFP