MOP and World Bank Report suggests KRG needs US$1.4b to stabilize economy
PM Barzani says Kurdistan needs more international humanitarian and military support
The Kurdistan Regional Government (KRG) is facing an economic and humanitarian crisis as a result of the influx of Syrian refugees and more recently the Internally Displaced Persons.
According to a newly completed KRG – World Bank report, economic growth contracted 5 percentage points in the Kurdistan Region, and poverty rate more than doubled increasing from 3.5 percent to 8.1 percent.
The report, Economic and Social Impact Assessment of the Syrian Conflict and ISIS Crisis, provides national and regional policy makers with a technical assessment of the impact and stabilization costs needed for 2015, associated with the influx of refugees and IDPs. The stabilization cost for 2015 is estimated at US$1.4 billion in additional spending above and beyond the KRG budget.
This estimate could get much higher depending on how long the crisis persists. While the KRG has been responsive to addressing the needs of the displaced population up till now, more resources are needed to avert this humanitarian crisis and address the needs of the displaced population in the medium and longterm. Impact refers to the immediate economic and fiscal effects on the KRG economy and budget, while stabilization cost refers to the additional spending that would be needed to restore the welfare of residents of the KRI.
“The international community remains deeply concerned by the circumstances facing the refugees and Internally Displaced Persons in the Kurdistan Region of Iraq,” said Robert Bou Jaoude, World Bank Special Representative for Iraq.
“We hope that this assessment will support the KRG’s dialogue with its national and international counterparts and that a swift resolution to this problem will be identified’, noted Jaoude.
The study highlights how prices and unemployment have increased, and refugees and IDPs entering the labor market are pushing wages down. A surge in violence led to supply side shocks. The ISIS crisis has had a significant effect on trade of goods and services. Transportation routes were disrupted. Foreign direct investment flows have declined and operations of foreign enterprises have been adversely affected. Disruption of public investment projects has had a negative impact on the economy.
“As a result of the Syrian conflict and the ISIS crisis, KRI’s population increased by 28 percent placing strains on the local economy, host community, and access to public services. We accept- ed and treated them as our own by providing access to all public services in our region,” said Dr. Ali Sindi, KRG Minister of Planning.
“While our government has allocated significant resources―through the Immediate Response Plan―to accommodate the needs of the displaced population, it cannot address this big scale humanitarian crisis on its own. Greater support from the national and international partners will be needed to rise above this humanitarian crisis and meet the needs of the displaced’, adds the KRG’s Minister of Planning.
The report is an outcome of close collaboration between a wide spectrum of World Bank experts and regional government institutions and international partners.
“A national and international response is needed in the immediate future and in the medium-term there is a need for structural reforms,” said Sibel Kulaksiz, World Bank Senior Economist and Project Leader. “The authorities have already recognized the need for economic reforms and the diversification of the economy. Indeed, one of the main pillars of the KRG Vision is the development of a diversified economy driven by the private sector.”
MOP and the World Bank organized a conference in Erbil about the findings of the joint study. The conference, took place on Thursday, February 12, 2015 at the Saad Convention Center.
The conference attended by the KRG Prime Minister Nechirvan Barzani, Ministry of Planning and World Bank officials.
PM Barzani expressed his gratitude to the World Bank for helping out Kurdistan Region, in an address to the Conference.
PM Barzani said in 2003 KRG drafted a comprehensive economic strategic plan, and achieved a fast development in all aspects in a short time.
“Kurdistan became a focus point on the region’s map,” said PM Barzani. “Although we have continuously had disagreements and problems with Baghdad over several issues that the previous federal government not even failed to address but also complicated them further day after day.”
Kurdish PM also talked about the Syrian conflicts, the ISIS war and the internal political and security crises inside Iraq has led to the displacement of hundreds of thousands of people into Kurdistan Region, and the Kurdistan Region tried to extend its helping hand to all of them according to the humanitarian principles and international regulations.
“All these happened in a short period of time with no strategic plan, and the federal government continued to worsen the crisis in the Region by cutting the Region’s budget share and its government salaries, and also created a big problem for the country’s national budget. Hence, despite the humanitarian crisis, the terrorism war and protecting security and stability, the Region faced a big economic crisis.”
He said that the KRG strongly believes that the crisis is going to reach an end but for this it needs a big support from the international community in the shape of military support to the Peshmarga Forces in their war against terrorists and humanitarian aid for the refugees and IDPs.
Barzani said that there are more than 1.5 million refugees and IDPs in the region, amounting to a 28% increase in population in only one year, which has put a huge burden on the government in terms of education, health, accommodation and employment for the refugees.
Commenting on the MOPWorld Bank report, PM Barzani said they can use the findings of the report as a road map for the evaluation of the situation and setting a mechanism for overcoming this economic and humanitarian crisis.
PM Barzani expressed his gratitude for all governmental, non-governmental and international organizations in helping the KRG through this difficult situation, and also thanked the Peshmarga forces for being able to keep the security and stability of Kurdistan Region in the middle of all the instability in the region and fighting the world’s most dangerous and powerful terrorist organization.
“For ultimate victory, the International Coalition has to provide advanced weapons and modern technology to the Peshmarga Forces.”
He also added that the Syrian crisis and the IS war will continue and the crises in Kurdish will continue as well, and it is expected that more people seek refuge in Kurdistan both from Syria and from inside the country. Therefore in cooperation with the Iraqi government and the international community, effective plans have to be developed to strengthen Kurdistan Region in all aspects.
“We believe in ourselves and are determined to develop our economy; we would like to have good relations with our neighbors and friends and develop our region. I hope we, you and the whole international community, are able to commit to our responsibilities towards the harsh situations of the refugees and IDPs in Kurdistan Region,” concluded PM Barzani.