This white paper contains the final report of the Emergency Cell for Financial Reform, which was formed pursuant to the Cabinet Resolution No. (12) adopted in its session held on May 12, 2020, with the aim of managing the financial situation in light of the current financial crisis, and developing the necessary solutions to achieve financial reform and improve the performance of the financial institutions. The Emergency Cell for Financial Reform has developed the economic reform program stipulated in the Domestic and Foreign Borrowing Law No. (5) of 2020, with the aim of restructuring the Iraqi economy to address the upcoming challenges.
The Emergency Cell for Financial Reform (ECFR) was chaired by the Prime Minister, and the cell’s meetings were presided over by Minister of Finance, and included representatives from the economic ministries and the concerned state institutions, including Ministry of Finance, Ministry of Planning and Ministry of Oil, as well as the Central Bank of Iraq. ECFR held more than twenty (20) official meetings between May and August, 2020 and received detailed statements and reports from all concerned state agencies, as well as from the representatives of the private sector.
ECFR has completed preparing its report, known as the “White Paper”, referring to the approach followed in it, through which the government provides its recommendations on the key challenges, with the aim of crystallizing a common base to be agreed upon and approved, followed by presentation of the necessary legislations and, accordingly, the implementation procedures.
The White Paper was designed to present, in a locally and internationally reliable manner, a combination of strategies and policies needed to address the economic and fiscal challenges of Iraq that have largely exacerbated. The White Paper was written with a deep awareness and recognition of the urgent need that implementation of the core economic reforms can no longer be postponed or carried forward. We can no longer hope that oil prices will somehow rise again, giving us the fiscal space to carry forward the reforms indefinitely.
Given that accurate and systematic diagnose of the economic challenges and their deep roots is the essential basis for identifying the required remedies, nearly half of the paper has been devoted to describing the economic and financial challenges and analyzing their roots and implications, as well as the opportunities that can be utilized if the reforms are implemented. This section describes the key macroeconomic conditions of the country, as well as the reasons and the need for the reform and restructuring. Then, the White Paper continues to discuss the main axes of the reform proposals in the main sectors that drive the economy.
A number of technical appendices that support the White Paper have been developed, which will be released separately for researchers interested to obtain more details about the reasons behind our recommendations and our conclusions. A detailed action plan will be launched that will include the required actions, the agency responsible for implementation, the timeframe and the monitoring strategies. It was considered to postpone the launch of the action plan pending the approval of the reforms included in this draft, to reflect the comments of the Council of Ministers and the parliament representatives as the final action plan will depend on the final approved version of this paper. The details of the legislations to be amended will be provided after the due approval of the White Paper.