• Iraq’s economic condition is gradually improving following the deep economic strains of the last three years. The defeat of ISIS in end-2017 now leaves the challenging task of rebuilding the infrastructure and providing services and job opportunities to the population. This is overlaid on the need to address the legacy of past conflict and neglect, including in the south, which was the poorest region of the country pre-ISIS. The World Bank estimates the cost of post-ISIS reconstruction at US$88 billion. US$30 billion worth of -commitments were made, mostly in the form of loans and guarantees, at the International Conference for the Reconstruction of Iraq, which took place in February 2018 in Kuwait. Reconstruction effort may be delayed due to political uncertainty following elections in May 2018.

    The rebound of economic growth in 2017 was lower than expected. Iraq maintained oil production in line with OPEC+ agreement. In 2018, overall GDP growth is estimated to return positive at 1.9 percent thanks to a notable improvement in security conditions, higher oil prices, and expected higher public and private investment. Non-oil growth is estimated to show a strong rebound at 5.2 percent this year, underpinned by broad-based growth in agriculture, industry, and services. Inflation was low in 2017 at just 0.1 percent, but increased demand pushed inflation at 1.7 percent in July 2018. Higher domestic demand and increased credit to the economy (albeit from a low level) will likely further increase inflation to average 2.0 percent in 2018.

    In 2018, the overall fiscal balance is estimated to post a surplus of 1.2 percent of GDP due mostly to higher oil prices. The plunge in world oil prices in 2015-16, increased security and humanitarian outlays and weak controls led to sharply lower oil revenues and rapidly widened the budget deficit. It narrowed in 2017 due to the pick-up in oil prices and measures adopted to contain current expenditures within the framework of IMF program and World Bank budget support series. With oil prices expected to rise, Iraq’s government will have ample fiscal space to finance reconstruction, provided that the process of fiscal consolidation continues. 

    Growth and the overall positive fiscal balance are estimated to further reduce the public debt-to-GDP ratio from 67.3 percent in 2016 to almost 55 percent. In 2018, higher oil prices will consolidate the current account surplus at 2.1 percent of GDP and the international reserves would increase to 8 months of imports, rebuilding buffers to external shocks. 

    The poverty rate has increased from 18.9 percent in 2012 to an estimated 22.5 percent in 2014. Recent labor market statistics suggest further deterioration of welfare. The unemployment rate, which was falling before the crises, has climbed back to the 2012 level.  Almost a quarter of the working-age population is underutilized, i.e., they are either unemployed or underemployed. Internally Displaced Persons (IDPs) have been buffeted by multiple adverse shocks: they have lost much of their wealth through destruction of assets; they have seen family members die, get sick, or become injured at a higher rate; and they have faced loss of jobs or businesses. These shocks have occurred at a time when their capacity to cope with shocks has been further strained. Fewer IDP adults have a job, so each employed adult in an IDP household supports more than six other household members. 


    The outlook for Iraq is favorable and overall GDP growth is projected to accelerate to 6.2 percent in 2019 sustained by higher oil production. In the following years, oil production is expected to increase only marginally, reducing overall growth to an average of 2.5 percent until 2023, due to the limited capacity of the GoI to mobilize investment in the oil sector. Non-oil growth is expected to remain positive on the back of higher investment needed to rebuild the country's damaged infrastructure network, private consumption and investment. But sustained non-oil recovery will depend on the transition from an immediate rebound as security improves to implementation of a high-quality investment pipeline with sound financing. Thus, reconstruction will remain an upside risk for growth (rather than in the baseline) given the continued uncertainty about how it will evolve.

    Last Updated: Oct 11, 2018

  • The WB strategy aims at reinstating Trust between the State and Its Citizens through Inclusive Private Sector-led Growth and Sustainable Recovery.

    The World Bank has developed the Country Partnership Framework (CPF) which defines the Bank program for the period FY18-FY22. The CPF builds on the lessons and results of the previous World Bank/International Finance Corporation/Multilateral Investment Guarantee Agency (IBRD/IDA/IFC/MIGA) Country Partnership Strategy (CPS) for FY13–16, as well as on the recommendations of the Performance and Learning Review (PLR) conducted in July 2015. The CPF is also based on the findings and the priorities identified in the Systematic Country Diagnostic (SCD), and links directly to the Middle East and North Africa (MNA) Regional strategy. A new CPF 2019-2023 is underway that builds on the current needs of Iraq, especially within the context of increased oil prices and ongoing efforts at reconstruction and development of the liberated areas and allover Iraq. The new CPF prepares the ground for the medium and long-term engagement as it aligns with and supports the government’s medium and long term strategic framework, as well as the National Development Plans and the vision 2030.

    Since April of 2015, the World Bank has re-focused its strategy to help the GOI manage the twin fiscal and security shocks, while improving service delivery and increasing inclusion of vulnerable groups, particularly in the liberated areas. To that end, the World Bank approved i) in July 2015, a US$350 million financial package, the Emergency Operation for Development (EODP), which supports the reconstruction of damaged infrastructure and restoration of public services in areas liberated by the government in two governorates; ii) in December 2015, a US$1.2 billion and in December 2016, a US$1.44 billion Development Policy Financing loan (DPF) to help Iraq weather the fiscal crisis and advance reforms in three areas: improving the management of public finances, securing a more stable and sustainable supply of energy, and supporting more efficient and transparent state-owned enterprises; iii) in December 2016, the World Bank provided US$41.5 million to support Public Financial Management (PFM) reforms through automating the budget process with the development of the Iraqi Financial Management Information System (IFMIS), implementing Public Investment Management (PIM) and Public Procurement reforms  at the Federal and KRI governments’ level; and iv) in September 2018, the World Bank and the European Union have signed a US$18.1 million Administration Agreement (AA) for the Bank to implement the new “Strengthening PFM Oversight and Accountability Institutions in Iraq”, 

    Four new IBRD (International Bank of Reconstruction and Development) operations have been approved by the Board; namely, EODP (additional financing US$400 million), Baghdad Water Supply and Sewerage Improvement Project (US$210 million), Iraq Social Fund for Development (US$300 million), and Iraq Emergency Social Stabilization and Resilience Project (US$200 million).

    Moreover, the World Bank has supported the GOI in developing the Reconstruction and Development Framework (RDF) that outlines the Government’s commitment and approach to moving from emergency to recovery and development for the population affected by the crisis. The framework addresses the distinct challenges in the liberated areas while at the same time recognizing the need for broader national reforms that benefit the entire country, including the governorates indirectly affected by the conflict. The framework covers the Challenges and Recovery Needs, Recovery and Development Plan, Institutional and Implementation Arrangements. The RDF builds on the findings of the Damage and Needs Assessment (DNA) that was carried out by the GOI with help from the WB. The DNA was unpresented in its sectoral and geographic scope, covering damages and needs for building back in a resilient manner across 19 sectors in all seven conflict-affected governorates in Iraq. The DNA revealed damages worth $ 45.7 billion and needs amounting to US$88.2 billion.

    The World Bank has also supported the GOI through the preparation of the Iraq future vision under Iraq Vision 2030, which defines the elements and the strategic reforms to establish a new social contract for peace and prosperity. the vision focuses on (i) a new governance framework to ensure better service delivery; (ii) rebuilding the human capital; (iii) job creation; and (iv) macroeconomic framework to enable inclusive and sustainable growth.

    International Finance Corporation (IFC)

    IFC has played a strong counter-cyclical role in Iraq over the last several years. IFC's committed portfolio in Iraq has grown considerably over the last five years and exceeded $1.5 billion diversified geographically and across sectors, in    power, telecoms, manufacturing, agribusiness, logistics, and services. In FY16, IFC committed US$375 million in MGES Power, the leading local private power investor in Iraq to help meet the critical infrastructure needs of the country.  In FY18, IFC committed $269 million with Zain Iraq, the leading mobile operator, to support the rehabilitation of their network in the liberated area. IFC current investment pipeline consists of potential investments in retail, healthcare (hospital), ports, digital financing, and power. 

    IFC is closely collaborating with the World Bank teams on applying the Maximizing Finance for Development (MFD) principles across strategic areas. Besides infrastructure and energy (other than upstream oil and gas), transport and water have been identified as potential MFD sectors. The Financial sector has been selected as another critical sector that would require WBG support under MFD.

    Multilateral Investment Guarantee Agency (MIGA)

    As of March 23, 2018, MIGA’s outstanding gross exposure in Iraq stood at US$8 million. MIGA signed its first contract in Iraq in FY2011 for a project that supported a Turkish investment in a water bottling plant in Baghdad. In FY2014, MIGA provided a guarantee for a project in the telecom sector in Kurdistan region of Iraq and in FY2015 MIGA supported a port logistics project in Umm Qasr. As a Fragility, Conflict, and Violence–affected (FCV) country, Iraq is eligible for projects to be supported by MIGA’s Conflict-Affected and Fragile Economies Facility, a multi-donor trust fund aimed at enabling MIGA to assume higher risk and insure more investment projects in FCVs. Bank has supported development of a Maximizing for Finance Development MFD-enabled Reconstruction Strategy for liberated areas of Iraq and following the successful outcome of Kuwait conference, we expect MIGA and IFC to scale up its engagement during the reconstruction phase to crowd in private investments. Bank, IFC and MIGA teams are working very closely for implementation of the reconstruction strategy.


    Last Updated: Oct 11, 2018

  • Results:

    Current IBRD portfolio stands at US$1.86 Billion with the following achievements:

    • About 2 million Iraqis are benefiting from the 19 Bridges have been reconstructed and 320 KMs of roads in the liberated zones of Iraq have been rehabilitated toward reinstating access to essential health and education services, markets, etc.
    • About 50,000 Iraqis are already benefiting from the first lot of the ambulances being supplied (overall 39 ambulances). About 4 times of the said beneficiaries are also expected to benefit from the 14 mobile clinics expected to be delivered in October 2018.
    • About 500,000 Iraqis are also benefiting from reinstated electricity from the tens of newly supplied and installed generators, transformers and other electricity equipment.
    • About 500,000 Iraqis are benefiting from the 167 pieces of special municipal machinery and equipment used for the repair of damaged water and sanitation infrastructure and municipal services, and the supplied 3,120 garbage containers for solid waste management system to the targeted cities.
    • Several thousands of Iraqi laborers are benefiting from the temporary employment opportunities created by the works contracts under EODP. Equally important, many workers are also gaining new skills that could be of benefit to them for future employment. 

    Moving ahead:

    In addition to more support in the above-mentioned sectors in cities liberated from ISIS that will benefit an additional 2 million Iraqis, preparations are undergoing to launch key activities to improve: 

    • Education services to 65,000 students by reconstructing 35 schools (towards a more modern school set-up that could become prototype for the government to adopt in building new schools); and re-training of teachers; 
    • Irrigation and agriculture practices are expected to be improve the income of about 35,000 people (especially in rural and poor areas); 
    • Transport services with 7 public transport (PT) terminals in core cities will be rehabilitated to provide safer and organized PT services;
    • Beneficiary’s households access to Social Safety Nets Programs: 1,200,000 (of whom 50 percent are female-headed households).
    • generation of work days by cash for Work Schemes: 10,000,000 (out of which 3,000,000 for women).
    • Beneficiaries households receipt of cash for work support: 150,000.
    • Beneficiaries households receipt of cash for work support (female headed households): 75,000.
    • beneficiaries of livelihoods access to microfinance support for their projects: 12,000
    • beneficiaries access to psychosocial support services in the liberated areas150,000.
    • Basic services projects delivery serving over 600 local communities under the Social Fund for Development: 1,700. 

    Last Updated: Oct 11, 2018



Iraq: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments




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In Depth

Nov 13, 2018

Expectations and Aspirations: A New Framework for Education in the Middle ...

The report outlines a new framework with a three-pronged approach. Unleashing education’s potential will require a ‘push’ for learning, a ‘pull’ for skills and a new ‘pact for education.

Oct 03, 2018

Iraq's Economic Outlook - October 2018

Iraq’s economic condition is gradually improving following the deep economic strains of the last three years.

Sep 18, 2018

Working for the People of Iraq- September 2018

The World Bank program in Iraq aims to support the government’s efforts to create inclusive economic growth and more and better opportunities for all.


Working for the people in Mashreq

Between fiscal year 2014 and 2018, the World Bank financed around 35 projects in the Mashreq Region, totaling approximately US$8 billion. This paper includes the main World Bank financing instruments and the strategy.

Additional Resources

Country Office Contacts

International Zone, Baghdad
Reem Kamil
+964 7809208187