WASHINGTON, Aug. 14 (UPI) -- The International Monetary Fund praised Iraq’s government for moving forward on debt agreements but urged it to increase oil production and pass an oil law.

Iraq failed to fully invest its allocated oil capital budget, leading to a larger fiscal surplus in the past two years, but plateaued oil production in a sector in need of spending, according to a new IMF report.

The IMF executive board released the report Tuesday following meetings earlier this month with Iraqi officials, all a part of deals the Iraqi government signed to alleviate its debt, incurred by Saddam Hussein.

It said since Aug. 1, 2005, “Economic growth has been slower than expected … mainly because the expected expansion of oil production has not materialized.�

Iraq has produced an average of about 2 million barrels per day of oil over the past three years. Its oil sector was ravaged by war, Saddam Hussein’s mismanagement and U.N. sanctions. Security throughout the country, as well a lack of institutional capacity to spend needed investment, has kept the sector lagging. Iraq’s oil sales -- about 1.6 million bpd last year -- brought in more than $31 billion last year.