BAGHDAD: Iraq needs to reform to lessen its economic dependence on the government, and must pay more attention to its tiny non-oil sector, the head of the country's central bank urged in an interview on Monday.

Sinan al-Shabibi, who has headed the institution since mid-2003, called for red tape to be cut to promote private businesses, and said officials should concentrate their efforts on boosting non-energy-related industries rather than the lucrative crude oil sector.

"The government is expanding, too much," Shabibi told AFP in an interview in English at the Central Bank of Iraq's (CBI) headquarters in Baghdad.

"(It is) as if we are relying completely on the government to provide jobs, and to provide development. ... A lot of people think that developing the non-oil sector will take a long time, and probably they go the easy way, the government," he said.

Oil sales dominate Iraq's economy and government revenue, bringing in $8.8 billion last month, the highest figure since 1989. Overall, it represents two-thirds of gross domestic product and 95 percent of government income.

Income from the sector is also rising. The country currently produces more than three million barrels per day, but is looking to increase this figure dramatically in the coming years.

Despite its outsized share of the economy, however, oil accounts for just one percent of jobs, according to the United Nations.

That, combined with a moribund private sector, has resulted in an unemployment rate officially reported at 12 percent, but estimated to be as high as 30 percent.

Shabibi, an economist who wrote his doctoral thesis on managing industrialisation during times of uncertain oil prices, called for authorities to ease regulations on private business and step up their focus on agriculture, industry and technology.

"Another priority is for the government to work very hard to ease the conditions for the private sector to work," he said. "We have, actually, some kinds of regulations which impede all kind of development for the private sector.

"I know a lot of private sector people come to the country, but they cannot actually continue because there are a lot of problems facing them. I think it is important that we ease conditions for people to work, we ease conditions for companies to work, so that... other sectors can work."

Shabibi said that Iraq's non-oil industries needed "a lot of work".

"If you want to talk about reducing unemployment, all these things, really you should develop ... the non-oil sector," he said. "The non-oil sector, despite the fact that it's very small, is the one where we should concentrate."