The Kurdistan Region of Iraq Needs an Estimated US$1.4 billion this Year to Stabilize the Economy
The Kurdistan Regional Government (KRG) is facing an economic and humanitarian crisis as a result of the influx of Syrian refugees (starting in early 2012) and more recently the Internally Displaced Persons (IDP) in 2014.
According to a newly completed KRG – World Bank report, economic growth contracted 5 percentage points in the Kurdistan Region of Iraq (KRI), and poverty rate more than double 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 [1.6 trillion Iraqi dinars] 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 long-term.
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.”
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.