A roadmap to drive the Iraqi economy forward
At the height of its reach, Daesh occupied almost 40% of Iraq’s territory. A tragedy for the communities they enslaved and also for Iraq’s economy: the area occupeid produced 80 thousand barrels of crude oil in 2014. The December 2017 liberation of Iraq was therefore a significant release for both people and economy.
Iraq’s economy has proved extraordinarily resilient. It has weathered serious crises, and still suffers from real structural issues within the production and financial sectors, the result of a myriad causes including the lack of strategic economic policymaking and national resources drained by military operations.
Despite the heavy burden of military liberation, the Government of Iraq remains committed to resurrecting the economy, and quickly: overcoming challenges such as the cost of basic services and civil servant salaries. To get back on track it must deal with the gap in investments which must be financed through internal or external sources, all while developing a competitive and attractive investment environment.
A Revitalized Vision
In August 2015, Iraqi PM Dr. Haider Al Abadi proposed a series of reforms centered around government efficiency and anti-corruption. Alongside ongoing oil revenues, local economic reform measures that cut down on non-vital public expenditure and raise collection rates from sources such as customs, duties and other sources of public revenue, this pathway should have a substantial and measurable impact on the fiscal budget and domestic resources available.
The Government of Iraq also implemented a number of reforms aimed at increasing Iraq’s competitiveness on the investments and ease-of-doing-business index, through removing barriers and cutting down on red tape facing local and international investors. These reforms now allow entrepreneurs and investors to start up their operations in a much shorter time while streamlining the government record-keeping and tax accounting.
A New Dawn for Iraq
Fiscal reform policy effect can be seen in several sectors, and an increased stream of non-oil revenues is now apparent. A total of 2,219 and 2323 new private sector companies were registered in 2016 and 2017 respectively; the Iraqi securities exchange also witnessed an increased trading volume that grew from ID 516 bn to ID 900 bn in the same period.
The World Bank confirms that Iraq has been successful in implementing structural reforms in local regulation, helping to facilitate new businesses, supported by better access to credit and financing facilities.
“The Government of Iraq has launched a fundamental economic reform agenda based on the framework of its 2014-2018 Government Programme which put institutional economic reform and private sector development at the forefront of its priorities,” said Saruj Kumar Jaha, Regional Director for the Middle East at the World Bank.
The government has also strengthened the credit information infrastructure with the launch of a credit information bureau managed by the Iraqi Central Bank. As of January 2017, this includes five-year histories of 234,967 individual and 4,877 commercial loans.
The government has also succeeded in enhancing the country’s investment ecosystem and positioning, ratifying the following economic and investment agreements:
- In 2015, Iraq joined The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention), one of the key instruments of international law that protect and promote foreign investment.
- In 2017, Iraq ratified the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the Mauritius Convention on Transparency).
- In 2018, Iraq ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
A Bright and Productive Future
Held in Kuwait, Iraq reconstruction conference which wason 12 -14 February 2018. To support to the country following Daesh’s territorial defeat in 2017. The conference, which took drew participants from 76 countries and regional and international organizations, 51 development funds and financial institutions, and 107 local, regional and international nongovernmental organizations, as well as 1,850 private sector representatives .
Investment Opportunities Symposium was held in April 2018. The Symposium demonstrated huge local and international investment appetite throughout all of Iraq’s different provinces and promoted new economic models for Iraq such as Public-Private-Partnerships. PPPs should create excellent opportunities for the country, combining support from public authorities, businesses and civil society. Nine MoUs were successfully agreed, including:
- Central Markets Rehabilitation – Al Mustansiriyayah, Al Adl, Al Amal, Al Salihiyya, and Al Shaab. Total project cost: $250m, awarded to Daeco of the UK.
- Al Muftiyya Project in Basra – Residential, Commercial and Leisure Development. Total project cost $234m, awarded to Daeco of the UK.
- Soda Complex and Table Salt Production Plant in Al Muthanna. Total project cost: $80m, awarded to Al Ghaith of the UAE.
- 3 MoUs with Kuwaiti investment group Jawad Bukhamseen to develop hotels and commercial centers in Al Kadhimiyyah, Kerbalaa, and Samarraa.
- A 5-star hotel and commercial center in Baghdad.
- The Satellite E-Government Project.
- Development of the Baghdad Industrial City.
- Expansion and development of Al Andalus Specialist Hospital in Baghdad.
- Establishment of a branch of an international specialized university in Baghdad over 25,000 square meters, awarded to Al Hawadi Group of the UAE.
These exciting new initaitives correspond to Iraq’s 5-year plan for 2018-2022. The five-year plan seeks to restructure the economy, putting good governance and multi sector reform at its heart, focussed on the recovery of provinces most affected by internal displacement and difficult security conditions.
The development of Iraq’s investment environment will also enable the development of various sectors and create more than two million new jobs and more integration with regional economies and the global community, paving the way to a bright future.