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publication May 31, 2021

Iraq Human Development Public Expenditure Review: Addressing the Human Capital Crisis – A Public Expenditure Review for Human Development Sectors in Iraq


Iraq is facing a human capital crisis despite having been one of the early investors in health and education in the MENA region. The World Bank’s Human Capital Index shows that a child born in Iraq, today, will reach, on average, only 41% of her potential productivity when she grows up, compared to the 57% average of the MENA region. Large disparities in human capital outcomes also persist between regions, urban and rural areas, and among vulnerable groups namely women and internally displaced people.

With this background, the Human Development Public Expenditure Review (HD‐PER) offers evidence‐based policy recommendations to inform reform that is urgently needed to spur human capital development. The report examines three chapters: the health sector, the education sector, and the pension system. In each chapter, it focuses on sector outcomes as well as efficiency, effectiveness, and equity of spending within the sector. It also highlights accordingly an agenda for reforms within each sector.

The Iraq HD‐PER builds on existing data and exerts an exceptional effort to collect spending and sector information amidst a data scarce and fragmented environment. This HD‐PER looks at general historical trends of various expenditure components and budgetary revenue sources and offers scenarios to simulate the magnitude of the fiscal adjustment in the medium‐run to create the needed fiscal space for additional spending in human capital.