There is a growing sense among the Iraqi populace that the economy is irreparably broken. Over the past five years, mass protests have cyclically broken out over unemployment and pervasive corruption. The government and dominant political parties have, in turn, tried to quell dissent by further extending public sector posts and pensions. Many Iraqis obtain their positions through the backing of one political party or another. But this patronage strategy has almost run its course, with its structural  vulnerability coming to the fore during periods of financial and economic crises. Meanwhile, most Iraqis continue to experience a chronic absence of basic needs such as water, electricity, healthcare, etc.

Over the past several months, the government has been under pressure to deliver a budget that will address these challenges. Part I of this edition of the Iraq Economic Review (IER) unpacks the progression of the budgetary process, which to date remains incomplete. The Review focuses on three stages: (1) The formation of the government’s overall economic philosophy through the publication of a policy White Paper (WP) on the economy; (2) The role of the Ministry of Finance in interpreting the WP and forwarding an initial budget; (3) The recent modifications made to the budget by the Council of Ministers (CoM). The Review also makes speculations about further modifications likely to be made by the Iraqi Parliament. After the discussion on the budget, Part II of the Review engages in an analysis of the oil sector, as its development over the short- and medium-term is essential to understanding budgetary challenges. Part III addresses conclusions and policy implications.

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