Strengthening Public Finances and Financial Markets in Iraq

Context

Iraq is undergoing a political, social and economic transformation, which has been marked by many setbacks and keeps exposing the country’s institutional shortcomings.

Iraq is highly dependent on oil, with almost the entire state revenue coming from oil exports. The country has one of the world’s weakest public finance systems.

Private sector financing is also insufficiently developed by international standards. The public has little confidence in financial intermediaries such as state and private banks and other financial service providers. State actors dominate private sector activity and are undermining the country’s economic recovery.

Objective

Public finances in Iraq are improved and the country’s dependence on oil is reduced.

Approach

The project operates in four areas:

1. Together with the federal tax authority, the project is drafting a tax reform and modernising the current taxpayer registration system to reduce the country’s financial dependence on oil exports.
2. On top of this, the project is improving the public finance system, including preparation of draft budgets, management and control. At the same time, the project is strengthening the supreme audit institution in its role to efficiently monitor the distribution and use of financial resources.
3. The project is supporting organisations that uncover and prevent money laundering. Working with the Anti-Money Laundering and Countering Financing of Terrorism Office and the Federal Commission of Integrity, the project is also drawing up risk analyses relating to money laundering in the financial sector.
4. Together with the Central Bank, various banks and digital financial intermediaries, the project is improving lending to the private sector, especially for small and medium-sized enterprises.

Last update: July 2023