BAGHDAD, March 26, 2016 –World Bank Group President Jim Yong Kim told a special session of the Iraqi parliament today that the path to stability and shared growth in Iraq lay in empowering local governments, opening up and diversifying the economy, and improving the management of public finances by reforming the public sector and increasing accountability.
The speech came during a joint visit to Iraq by Kim and United Nations Secretary General Ban Ki-moon to show international support for Iraq as it confronts the triple challenge of defeating Da’esh, maintaining momentum on reforms, and coping with the financial impact of the fall in oil prices.
“Even in the face of substantial challenges, democracy is taking root in Iraq,” Kim told members of parliament. “Iraq has chosen the path of political inclusion – a decision that created difficult challenges and holds great promise. It requires political compromises to build the broad coalitions needed to achieve national goals. As complex as it may seem, as difficult as it may be, political inclusion is part of the critical path to long-term stability.”
The World Bank Group president said that the new atmosphere of open competition among different perspectives and the difficulty of building the necessary coalitions to achieve national goals were a positive sign.
Kim drew on Iraq’s historical legacy for lessons on how the great civilizations had thrived by balancing central authority with local autonomy. “Let me suggest that the best way to protect and preserve the cohesion of the country is to do what your forebears did, “said Kim. “Empower all its regions, and to give more capacity to local governments, all the way to the municipal level.”
The World Bank president pointed to a recent US$350 million Bank-supported project that entrusted local authorities to rebuild infrastructure and restore services in areas liberated from Da’esh. It was an example of how bringing government closer to citizens underpins stability by restoring confidence in the state’s ability to meet basic needs
The speech also urged parliamentarians to unite around efforts to open up and diversify the economy, as another important step in unlocking Iraq’s immense potential. “You, the representatives of the people,” said Kim, “have the capacity to adopt laws that would open the door wide for young entrepreneurs, who are eager to take risks and engage in new ventures.”
In managing the financial crisis, Kim indicated that there was far more Iraq could do to strengthen its financial sustainability by improving the management of public funds and eliminating waste. Reforming energy subsidies was especially urgent as they were contributing to pervasive shortages of electricity. Replacing subsidies with cash transfers would better target and empower the most vulnerable. Greater public scrutiny of government spending would also, Kim suggested, increase efficiency and contribute to the national priority of fighting corruption. Kim also said that a clear commitment to reforms would build confidence, which he hoped would lead to greater international support for coping with the impact of low oil prices.
The World Bank Group president also proposed using financial incentives to encourage local governments to be more accountable to citizens and provide better quality services. In view of the size of its economy and its strategic geographic location, Kim observed that the stakes were high in Iraq. “We believe that Iraq’s success could bring stability and prosperity to hundreds of millions of people, “said Kim.
The joint visit to Iraq is part of a four-country tour that includes Lebanon, Jordan and Tunisia, to deliver the broader message of global support for the region as it copes with conflict and instability. Kim noted the recent US$1.2 billion loan to help Iraq weather its financial crisis -- the Bank’s largest ever direct budget support in the region -- as evidence of the Bank’s commitment to the country and its people.
Over the past several months, the World Bank Group has reoriented its strategy in the MENA region to promote peace and stability as the necessary conditions for development. Working with partners, the aim is to focus directly on the causes of conflict, while helping countries address its consequences and to recover and rebuild. The new strategy is built on four main pillars:
- Restore trust between citizens and their governments with greater accountability and improved services,
- Promote increased regional cooperation around the shared priorities of education, energy and water,
- Support countries and communities hosting large numbers of refugees, to strengthen their resilience,
- Prepare for reconstruction whenever and wherever peace emerges.
To raise the volume of financing needed to implement the new strategy, and to rally the international community around the common goal of promoting peace and stability in the region, the World Bank Group has partnered with the United Nations and the Islamic Development Bank Group. Together they have convened the international community to develop the New Financing Initiative to Support the MENA Region, which aims to: (i) provide concessional financing to support refugees and host communities in Jordan and Lebanon, the middle income countries of the region that have been the most impacted by the Syrian refugee crisis; and (ii) raise a greater volume of financing needed for post-conflict reconstruction and economic recovery for countries across the MENA region. Importantly, this initiative will create a unique platform among multilateral development banks and the UN to strengthen coordination on development assistance to the region at this critical juncture.
At the Supporting Syria and the Region conference that took place in February in London, the World Bank Group announced that it will triple its investment in the region as compared to the previous five years. Funding from the New Financing Initiative to Support the MENA Region combined with current programs is expected to total about US$20 billion over the coming five years. Next month, at the International Conference for the New Financing Initiative to Support the MENA Region – an event co-chaired by the leaders of the World Bank Group, United Nations and Islamic Development Bank Group – ministers from G7, Gulf Cooperation Council and broader European countries, as well as the heads of various international and regional organizations, will gather at the World Bank Group headquarters to pledge their support for the New Financing Initiative to Support the MENA Region.