IRAQ EMERGENCY FISCAL STABILIZATION, ENERGY SUSTAINABILITY, & SOEs DPF

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The country is at a dangerous crossroads not just for the security of its people but also for the stability of the region. Since at least the early 1980s Iraq has been in a continuous state of conflict or fragility such as the war with Iran (1980-88), the Gulf war of 1990-91, the 2003 war, widespread acts of terrorism since 2003, and the 2006-08 Sunni insurgency. Between 2003 and 2012, 182,000 people were killed by violent means. Iraq was slowly emerging from this long and protracted institutional transition and political instability that had also weakened institutional capacity and the state’s ability to deliver on its social contract with the Iraqi people. As a result, the country is persistently ranked around or below the 10th percentile globally based on indicators of government effectiveness, rule of law, and control of corruption. Amid this already vulnerable situation, Iraq has been hit by the ISIS insurgency. This has caused a quadrupling of violent deaths compared to 2009-12, adding 42,000 to the violent death count, and causing a loss of control of about one-third of the territory to the insurgency. This Development Policy Financing (DPF) seeks to safeguard economic stability and basic service delivery. The Emergency Fiscal Stabilization, Energy Sustainability, and State-Owned Enterprise Transparency Development Policy Financing (DPF) in the amount of US$1.2 billion will be disbursed in a single tranche. Iraq urgently needs support to help sustain the economy and protect the delivery of basic services to the Iraqi population while the government starts undertaking needed reforms. The DPF is built around three pillars, which are also its Program Development Objectives (PDOs), namely to improve: (1) expenditure management; (2) sustainability of energy supply; and (3) transparency of SOEs. The PDOs support key elements of Iraq’s medium-term development priorities, as detailed by the Prime Minister during his inauguration speech to Parliament in September 2014, and in the strategic priorities in Ministries: 2014-18 action plan which lays out the six priorities of his new Government.