🚀🌱 Iraq’s Investment Boom: Why Fiscal Reform Could Spark a New Era 🌱🚀

With a focus on reducing the deficit and increasing non-oil revenues, local investment in Iraq appears to be on the verge of a new phase of growth and prosperity, but the question remains about the sustainability of these policies.

The Prime Minister's economic advisor, Mazhar Muhammad Salih, affirmed that the Iraqi government is pursuing a disciplined fiscal policy that relies on sound management of the deficit and rationalization of public spending, which has strengthened the confidence of the private sector and reduced the level of uncertainty that was one of the most prominent obstacles to local investment.

Saleh said , “The impact of fiscal policy on the volume of local investments varies according to the nature of the sectors. While the energy sectors, especially oil, gas and renewable energies, have the largest share of investment flows due to their attractiveness and profitability, recent years have witnessed a clear shift towards investment in the construction and pharmaceutical industries, as local and foreign investors have begun to pay attention to the growing opportunities in these sectors.”

He added that “the impact of fiscal policy is varied; it is positive on large investment projects through relative financial stability, but it is more influential and effective with regard to small and medium-sized enterprises, as a joint incentive and financing approach has been adopted between fiscal and monetary policy.”

Establishment of Riyada Bank

Saleh pointed out that “the most prominent tools of this approach is the establishment of Riyada Bank as a mixed bank specializing in financing small and medium projects with the aim of mobilizing nearly sixty percent of the unemployed workforce through long-term, easy loans, as it is being established with the contribution of private Iraqi banks and with the direct supervision and support of the Central Bank.”

He then continued, “In addition to cooperation with specialized international organizations, there were also extensive initiatives to provide loans to young people and support individual and group projects under the direct supervision of the Prime Minister within the Youth Initiative.”

Saleh explained that “the success of fiscal policy in reducing the deficit depends on achieving a delicate balance between sustaining macroeconomic stability and providing space for growth and investment. A disciplinary policy without a developmental vision may curb economic activity, while uncontrolled expansionary spending leads to a deepening of the deficit gap.”

Increase in non-oil revenues

“Based on this, financial reform programs work to increase non-oil revenues by expanding customs and tax collection, modernizing legislation, and enhancing public financial digitization to reduce leakage and waste, raise collection efficiency, improve the business environment to encourage the private sector to expand and invest, and raise the efficiency of public spending by adopting performance evaluation standards and linking projects to economic feasibility,” he added.

Saleh concluded his statement by emphasizing that “the success of the current fiscal policy is based on combining fiscal discipline to ensure macroeconomic stability and developmental stimulus to expand the production base and encourage local investment

. Digitalization, improving non-oil revenues, and enhancing private sector confidence are key pillars for strengthening public finances and achieving more sustainable economic growth in the short, medium, and long term.” link