Republic of Iraq Public Expenditure Review: Toward More Efficient Spending for Better Service Delivery

by The World Bank

Overview

Republic of Iraq Public Expenditure Review: Toward More Efficient Spending for Better Service Delivery provides an integrated perspective on how Iraq needs to provide better public service delivery while maintaining macroeconomic stability and fiscal discipline. These goals exist amid a challenging context of revenue volatility, the need to diversify the economy, weak accountability mechanisms, and residual conflict. Reflecting these challenges, key socioeconomic developmental indicators are stalled or are even declining despite rapid growth in public spending. Growth in spending has not been matched by absorptive capacity, let alone improved outcomes. The difficult task of encouraging fiscal institutions to embed practices of good economic management remains a work in progress. The task for Iraqi authorities will be to turn oil revenues into sustained welfare improvements. Macroeconomic stability alone is not enough to address social and economic development issues and to avoid a 'resource curse'. Economic diversification is imperative for the goals of creating jobs and promoting income-generating opportunities for the Iraqi population. In the years ahead, Iraqi government authorities will have the following key challenges: • to remove constraints to nonhydrocarbon economic activities, • to ensure the effi cient use of oil revenue, and • to restrain the growth of current spending to free up resources for public investment, while maintaining essential safety nets and social support for the poor and disadvantaged. Senior policymakers at the Ministry of Finance, Ministry of Planning, and line ministries have the opportunity to take concrete steps now. As economic growth prospects are favorable in the medium term, the Iraqi government needs to lay the foundations of a broadly diversified economy and to provide decent public services and security while facilitating adequate economic freedom.

Product Details

ISBN-13:	9781464802959
Publisher:	World Bank Publications
Publication date:	08/27/2014
Series:	World Bank Studies
Sold by:	INDEPENDENT PUB GROUP - EPUB - EBKS
Format:	eBook
Pages:	172
File size:	9 MB

Table of Contents

Acknowledgments xi

Executive Summary xiii

Abbreviations xviii

Introduction 1

Chapter 1 Strategic Context 3

Introduction 3

Political Developments 3

The Macroeconomic Context 5

Poverty and Social Conditions 9

Prospects 12

Strategic Challenge 13

Notes 15

Chapter 2 Redirecting Government Expenditure 17

Introduction 17

The Size of the Government 18

Government Revenues and Main Revenue Management Issues 19

General Government Expenditure 23

Conclusions and Proposed Work 49

Notes 50

Chapter 3 From Strategy to Execution 53

Introduction 53

From Strategy to Resource Allocation 54

Commitment Devices 59

Public Investment Framework 63

The Case for Public Investment Management Framework in Iraq 68

Conclusions and Recommendations 71

Notes 71

Chapter 4 Case Study #1: Electricity 73

Introduction 73

Sector Overview 73

Status of the Electricity Sector 76

Conclusions 89

Notes 90

Chapter 5 Case Study #2: Health 93

Introduction 93

An Overview of the Health Sector in Iraq: Health Outcomes, Service Coverage, and Resources 94

Health Policy in Iraq 96

Efficiency and Equity Issues in Public Expenditure on Health 96

Conclusions and Proposed Work 101

Notes 102

Appendix A Macroeconomic Outlook 103

Appendix B Recurrent and Capital Spending by Administrative Classification, 2005-11 105

Appendix C Compensation for Employees by Administrative Classification 109

Appendix D Employment by Ministries and Centrally Funded Departments, 2012 113

Appendix E The Iraqi Budget Process 117

Appendix F Iraq: Strategic Planning Process 119

Appendix G Investment Budget: Advances and Hard Commitments 121

Appendix H Total Costs and Annual Appropriations for Transport Projects 123

Appendix I Estimated Duration of Issuance, Payment, and Clearance of Letters of Credit 125

Appendix J Diagnostic Questions for Evaluating Public Investment Efficiency 127

Appendix K The Population Pyramids: 1990, 2020, and 2030 131

Appendix L Iraq Infant and Child Health Indicators 133

Appendix M Iraq Communicable and Noncommunicable Diseases 135

Appendix N Maternal, Child, and Reproductive Health Care Services 137

Appendix O Health Workforce and Resources 139

Appendix P Iraq Health Spending and Comparators 141

Appendix Q Terms of Reference for the Proposed Health Public Expenditure Review 143

Bibliography 147

Box

3.1 Fiscal Decentralization and Intergovernmental Fiscal Transfers in Iraq 56

Figures

1.1 Annual Documented Civilian Deaths from Violence, 2003-12 4

1.2 GDP Growth Rate, 1998-2012 6

1.3 Inflation Rate, 2005-12 6

1.4 Oil Production and Exports Recovery, 2006-12 7

1.5 Oil Prices Before and After Financial Crisis, 2006-12 7

1.6 Sources of Total Revenues, Average, 2005-12 8

1.7 Government Spending, 2005-12 9

1.8 Gross Public Debt, 2005-12 9

1.9 Current Account Balance, 2005-12 10

1.10 Poverty Incidence and Access to Social Services in Urban and Rural Areas, 2012 12

2.1 General Government Total Expenditure, 2005-12 18

2.2 Revenues and Expenditures, 2008-12 21

2.3 Managing Oil Revenues 22

2.4 Economic Composition of Public Expenditure, Average, 2005-10 24

2.5 High Oil Prices/Revenues Translate into High Wage Bill, 2005-10 25

2.6 Compensation of Employees, 2005-10 25

2.7 Plan for Phasing Out of Public Distribution System and Phasing in of Social Safety Net System, 2010-14 29