Press Releases

PRESS RELEASE : Statement of the Iraq Economic Contact Group of the G7, European Union and World Bank [February 2024]

The press release issued by the Foreign Office on 20 February 2024.

January 2024 statement of the Iraq Economic Contact Group of the G7, European Union and World Bank, welcoming the government’s continued commitment to economic reform.

The Iraq Economic Contact Group (IECG) welcomes the government’s continued commitment to economic reform and stimulating private sector growth. The last semester witnessed important steps forward, such as the concrete initiative to reform public banking sector with the launch of an advisory firm-led review, Iraq’s finalised accession to the European Bank for Reconstruction and Development (EBRD), the holding of the PPP and Iraq Tax Reform Conference, active participation in COP 28 and the launch of the first Iraqi sovereign wealth fund, the Iraq Fund for Development (IFD).

However, while the path to reform is long, the IECG will support Iraq through these endeavours, which would be transformational for the Iraqi economy. On January 1st, Italy and the United States passed on the IECG co-chair to France and the United Kingdom, which will shape the IECG’s work in the first half of 2024. Under the incoming co-chairs, the IECG will continue to stand with Iraq on its path towards sustainable and inclusive economic development. More specifically, the Group will pursue its support to the government’s ambitious reform programmes, especially the banking sector, public finance management and private sector development.

The IECG’s areas of focus during this period will be as follows:

Financial Sector Reform

Supporting diversification and modernisation of Iraq’s banking sector, especially in view of Iraq’s ongoing evaluation by the Financial Action Task Force (FATF), in close collaboration with the government and Central Bank of Iraq. This will require increasing compliance with international standards, strengthening links with international banks, countering money laundering, and promoting the role of private banks and insurance providers. We welcome the government’s and Central Bank’s work on state-owned bank reform, banking sector modernisation and improving governance around commercial banking; and e-payments (which will facilitate formalisation of the economy).

Public Financial Management

The three-year Budget Law sets out Iraq’s medium-term economic vision and strategy. However, against the backdrop of uncertain oil prices prospects, fiscal policy has to be sustainable, while preserving investment for future growth and targeted social spending to help the most vulnerable. This would require mobilising additional non-oil revenue, containing the government’s wage bill and reforming the pension system. In this context, the IECG welcome the government’s continued plans to strengthen public financial management including steps towards the establishment of a Treasury Single Account (TSA) and an Integrated Finance Management Information System (IFMIS). We support the government steer on modernising customs in Iraq by facilitating the roll-out of UNCTAD’s Automated System for Customs Data (ASYCUDA), which will be a game-changer in customs processing in Iraq while improving tax collection and the ease of doing business.

Private Sector Development

A dynamic and inclusive private sector is key to create the millions of jobs that will be needed in the coming decades and contribute to Iraq’s growth and stability. The IECG will continue supporting the Iraqi government in its efforts to foster Iraq’s business environment, diversify the economy and reduce oil dependency. This includes, inter alia, improving business regulation, digitalisation, access to finance for businesses and strengthening anti-corruption mechanisms. These efforts will help build resilience, particularly when it comes to creating equal and meaningful economic opportunities for Iraqi women and youth. The IECG welcomes the launch of the Iraq Fund for Development, which has the potential to make significant contributions to rebuilding Iraq’s human capital, developing the private sector and strengthening Iraq’s climate resilience.

Finally, the IECG welcomes the recent meetings of His Excellency Prime Minister Sudani with international financial institutions in Davos earlier this year, including with the Managing Director of the IMF and the President of the World Bank. The IECG supports ongoing engagement with international financial institutions which can provide valuable technical expertise, including the World Bank, IMF and EBRD. The IECG will also support the work to create conditions for a final understanding on the Framework Agreement with the European Investment Bank (EIB). These financial institutions will also support Iraq to implement its priorities, for example during the upcoming IMF annual consultation with the Government of Iraq. Comprised of donors and partners, the IECG sees itself well-positioned to facilitate Iraq’s engagement with these institutions and to advocate for multilateral support to Iraq’s fiscal and economic reform agenda.

As friends and partners of Iraq, Canada, France, Germany, Italy, Japan, the European Union, the United Kingdom, the United States, and the World Bank, look forward to pursue their collaboration with the Government of Iraq to support common goals, through regular dialogue at both the political and technical level.