"STATUS OF IRAQ" BY DINAR IRAQ & DONG VIETNAM, 17 DEC
DINAR IRAQ & DONG VIETNAM
On December 12, the Iraq Economic Contact Group (IECG) held the final meeting of 2023, co-chaired by Italy and the United States. As friends and partners of Iraq, Canada, France, Germany, Italy, Japan, the European Union, the United Kingdom, the United States, and the World Bank commit to supporting Iraq in the implementation of a comprehensive and ambitious reform agenda, paving the way to sustainable and inclusive economic development.
The IECG is eager to strengthen its engagement with the Government of Iraq (GOI) through regular dialogue at both the political and technical level. This engagement is crucial to streamline cooperation between the two sides, identify and support common goals, and support the GOI’s priority reform areas. The IECG commends Prime Minister Mohammed Shiaa al-Sudani for appointing business and economics experts within his office and looks forward to collaborating with them.
The IECG was encouraged by Prime Minister Sudani’s announcement of new economic reform initiatives throughout 2023 and the passing of a historic three-year budget that laid the foundation for implementation of the government’s reform agenda. In October, Iraq gained membership to the European Bank of Reconstruction and Development (EBRD) – a move strongly supported by the IECG as the first step to unlocking new sources of investment and enhanced cooperation with other multilateral and bilateral financial facilities. In the past month, the government convened conferences on Public Private Partnerships (PPPs) and tax reform, including a new bank sector reform project with Rafidain Bank.
Further, the GOI recently announced the establishment of the Iraq Fund for Development (IFD) alongside the Development Road project, and the Prime Minister strengthened economic ties with regional partners. The GOI’s efforts to expand the use of digital platforms for financial transactions, with electronic payment and other e-commerce mechanisms, represent important steps to minimize the informal economy and reduce opportunities for corruption.
Looking ahead to next year, the IECG welcomes further cooperation in support of Iraq’s economic and financial sector development, including Prime Minister Sudani’s policies to strengthen the dinar and oversee monetary policy. Clear communication of new dinar policies during the transition period will help avoid adverse effects on Iraqi households and businesses as well as on development cooperation projects and foreign investments in Iraq. The IECG also stands ready to support Iraq’s next steps to becoming an EBRD Country of Operations, its journey toward World Trade Organization accession, and its potential partnership with the European Investment Bank (EIB).
EIB’s expertise in road, railroad, water and sanitation investments, climate action, environmental sustainability financing as well as urban transmission initiatives will accelerate key infrastructure measures and help facilitate a green transition. The IECG urges further attention in 2024 to address the deficit and public sector wage bill, measures that would improve fiscal resilience. Timely budget execution will be critical to the GOI’s ability to sustain important infrastructure investment, particularly in expanding domestic power generation, distribution, and expansion of green energy.
Long-term sustainable economic development is contingent on a dedicated response to pressing climate and environmental challenges. Sustained investment in water management and infrastructure is critical to counteract the debilitating impacts of climate change. To accelerate private sector growth, the IECG encourages government action to identify and address the challenges faced by domestic and international business, including efforts to promote transparent and predictable regulations. In this vein, we welcome further progress on the PPP, Companies, Industrial Investment, Customs, and Arbitration laws as well as timely implementation of the recommendations from the recent PPP and tax reform conferences. On January 1, Italy and the United States proudly hand over the IECG to incoming co-chairs France and the United Kingdom. Under their leadership, the IECG will continue to support an ambitious reform agenda, promote sustainable economic development, and stand by Iraq’s side as a reliable friend and partner in 2024.
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