Iraq and the World Bank Discuss Supporting Economic and Financial Reform in 2024
In August 2024, Iraq and the World Bank engaged in discussions to support economic and financial reforms. These talks are pivotal in helping Iraq regain the trust of its citizens by stabilizing the economy, improving governance, and rebuilding livelihoods. The World Bank is known for mobilizing financial and technical assistance to aid countries in their development efforts, and Iraq is no exception.
Strengthening Economic Foundations
Iraq, one of the world's most oil-dependent countries, has seen its economy exposed to significant macroeconomic volatility due to its reliance on oil revenues. In 2024, the country's leaders are keen on diversifying the economy to reduce this dependence and create a more stable financial landscape.
To achieve this, the World Bank is working closely with Iraq to implement reforms aimed at improving the country's fiscal health. This includes addressing budget rigidities that restrict fiscal space and limit the government's ability to respond countercyclically to economic challenges.
Addressing Unemployment and Economic Recovery
Unemployment has been a pressing issue in Iraq, with rates significantly higher than pre-COVID-19 levels. The pandemic exacerbated economic challenges, leading to job losses and increased unemployment, particularly among the displaced, returnees, women jobseekers, and those in the informal sector. The World Bank's support is crucial in helping Iraq navigate these challenges and foster a recovery that is inclusive and sustainable.
Enhancing Non-Oil Sectors
The non-oil economy has shown signs of growth, with sectors such as services experiencing solid performance as COVID-19 containment measures were eased. This is a positive development, as it indicates a shift towards diversification and a reduction in dependency on oil revenues. The World Bank is supporting Iraq in this transition by focusing on reforms that can stimulate growth in non-oil sectors and create new opportunities for employment and economic stability.
Fiscal Balance and Revenue Mobilization
Government revenues in Iraq surged in 2021, driven by higher oil prices and measures to mobilize non-oil domestic revenues. These gains helped turn the overall fiscal balance to a surplus, which is a significant achievement considering the country's history of fiscal deficits. The World Bank's role in these successes cannot be overstated, as it has provided guidance and support in revenue mobilization strategies that have proven effective.
Looking to the Future
As of August 2024, Iraq and the World Bank are focused on continued collaboration to implement economic and financial reforms. These efforts are critical for Iraq's long-term stability and prosperity. By addressing unemployment, enhancing non-oil sectors, and improving fiscal health, Iraq can build a more resilient economy that benefits all its citizens.
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