Economic management

Since early 2004 ASI has been active in supporting economic management and fiscal policy in Iraq.  During the Emergency Public Administration Reform Programme, ASI provided basic budgetary and fiscal policy assistance first to the CPA then the Interim Iraqi Government and eventually the Transitional Iraqi Government. 

Following ASI's initial work the Economic Reform Programme II began in 2005.  This programme focused on fulfilling Iraq's economic potential following several decades of misrule, sanctions, and war which has severely damaged its economy. The first phase in 2005 focused on two tracks. The first was helping Iraq secure a Stand By Arrangement (SBA) with the IMF which would guarantee a write off of 80% of $40 billion in foreign debt. The second track focused on public financial management and largely involved helping the Transitional Government of Iraq complete the 2006 budget, execute the 2005 budget and solve any bottlenecks in public expenditures that often arise under the difficult circumstances facing Iraq.
 

The second phase of the programme developed around helping the first elected permanent Government of Iraq (GoI) meet the conditionalities set forth in the SBA. The first step of this involved establishing and building capacity within the cross-ministerial SBA Implementation Unit (SBAIU). After that support was given to the SBAIU, the Ministries of Finance and Planning, and other relevant ministries to help the GoI meet the SBA's conditions. This included helping in preparation of the 2007 and 2008 budgets, execution of the 2006 and 2007 budgets, assisting the GoI in a communications strategy regarding the necessary economic reforms including subsidy reduction, helping to design and implement a social protection plan to minimize the impacts of subsidy reform on the poorest Iraqis, and helping Iraq meet the quarterly reporting requirements with the IMF. Budget preparation and execution also included building capacity within the Finance and Planning ministries to do realistic medium term macroeconomic and fiscal forecasting, improve accounting procedures, improve cash management procedures, and improve budgetary and policy planning.

Our achievements have included:

• Budget projections are now presented in accordance with IMF standards and procedures;
• We have guided the GoI through two rounds of negotiations on debt forgiveness, with substantial debt forgiveness achieved to date;
• ASI helped manage 15 sessions of the Council of Representatives' Public Finance Committee;
• ASI's team is currently providing the most detailed monthly expenditure analysis available in Iraq.

ASI will continue working on economic and fiscal policy in Iraq through the Technical Support to Iraq project set to begin in 2008.

Our work on budget reform has included providing detailed input into the development of the GFS compliant classification introduced in the 2007 budget, modelling and estimating off-budget spending in the oil and electricity sectors, working with the World Bank to conduct a Public Expenditure and Institutional Assessment (PEIA) at both national and sub-national levels and undertaking analytical work on budget performance.