Economy - overview:
Decreased insurgent attacks and an improved security environment are helping to spur economic activity, particularly in the retail sector. Broader economic improvement, long-term fiscal health, and sustained increases in standard of living still depend on the government passing major policy reforms. Iraq's economy is dominated by the oil sector, which provides over 90% of government revenue and foreign exchange earnings. Oil exports have rebounded to levels seen before Operation Iraqi Freedom and government revenues have benefited, despite oil prices declining significantly since their apex of more than $140 per barrel in July 2008. Iraq is making modest progress in building the institutions needed to implement economic policy. In March 2009 Iraq concluded a Stand-By Arrangement (SBA) with the IMF that details economic reforms. Completion of the SBA was a condition for Iraq to receive a full 80% reduction of its debt owed to Paris Club creditor nations. The International Compact with Iraq was established in May 2007 to integrate Iraq into the regional and global economy, and some reform-minded leaders within the Iraqi government are seeking to pass laws to strengthen the economy. This legislation includes a package of laws to establish a modern legal framework for the oil sector and a mechanism to equitably divide oil revenues within the nation, although these and other important reforms are still under contentious and sporadic negotiation. Iraq's recent contracts with major oil companies have the potential to greatly expand oil revenues, but Iraq will need to upgrade its export infrastructure to enable these deals to reach their potential. Some foreign entities have expressed interest in reinvigorating Iraq's industrial sector. The government of Iraq is pursuing a strategy to gain foreign participation in joint ventures with State-owned enterprises, but has had little success in recent years. Provincial Councils also are using their own budgets to promote and facilitate investment at the local level. The Central Bank has been successful in controlling inflation through appreciation of the dinar against the US dollar. However, Iraqi leaders remain hard pressed to tranlate macroeconomic gains into improved lives for ordinary Iraqis. Reducing corruption and implementing structural reforms, such as bank restructuring and developing the private sector, would be important steps in this direction.

GDP (purchasing power parity):
$96.6 billion (2009 est.)