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Iraq is set to halve essential items covered by rations and subsidies because of insufficient funds and spiralling inflation, in a further threat to an already deteriorating ration system.

The cuts, to be introduced at the beginning of 2008, have prompted criticism from those who have already warned of social unrest if measures are not taken to address rising poverty and unemployment.

Mohammed Hanoun, the Iraqi trade minister's chief of staff, told Al Jazeera that a request for $7.2bn to cover 10 basic items currently rationed and subsidised by the government had been rejected.

"In 2007, we asked for $3.2 billion for rationing basic foodstuffs. But since the prices of imported food stuff doubled in the past year, we requested $7.2 billion for this year. That request was denied."

The trade ministry is now set to slash the list of subsidised items by half to five basic food items, "namely, flour, sugar, rice, oil, and infant milk," Hanoun said.

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