The World Bank informs Iraq that its financial situation is at risk, especially with regard to salaries of state employees
The World Bank has informed Iraq that its financial situation is in danger, especially with regard to salaries of state employees.
The World Bank, in its last report on Iraq late last year, indicated that “in the absence of clear structural reforms and the slow process of re-lending, the recovery of growth in Iraq may be short-lived. This situation seems especially present if we take into account the expectations of oil markets, as prices and exports are likely to decline given the decline in global demand and doubts related to the renewal of the OPEC agreement.
The report added, “The risks persist over the medium term. As the absence of economic diversification and the lack of budget flexibility associated with the wage bill in the public sector reduces financial surpluses in Iraq, as it increases the vulnerability of the economy to external shocks. These factors also threaten to further delay lending and undermine recent positive government efforts, especially in the electricity and agricultural sectors. Creating appropriate fiscal space for programs that promote growth will be a prerequisite for diversification and job creation, without which the large increase in oil production would mean little for most Iraqis.
The report pointed out that with the return of the displaced to their areas, there will be an increasing need to provide economic opportunities and maintain flexible social assistance in these parts of the country.
Fragility of the current socio-economic system
He stressed that “job shortages, corruption and poor service provision remain among the most important risks to growth and financial sustainability. Iraqi youth demonstrated in demonstrations in October 2019 to demonstrate these concerns and concerns. These demonstrations revealed the fragility of the current socio-economic system. It is expected that these social unrest will be dealt with through more short-term financial incentives – such as cash transfers, public sector employment, housing programs and others – in order to calm the anger of the protesters. However, the results may not be satisfactory because creating jobs, fighting corruption genuinely, and structural reforms will require a longer time frame. Source