Iraq’s 5-Year Development Plan Falls Behind Schedule

In 2009, Iraq announced its National Development Plan for 2010-2014. It included almost $200 billion in spending to diversify the economy, create jobs, and replace the state-run economy with a capitalistic one. In just its second year however, the program has fallen behind schedule.

In November 2009, Iraq’s then Planning Minister Ali Baban announced the 5-year National Development Plan. It was based around building up the country’s oil, electricity, farming, and industry. Its goals were to diversify the economy so that the private sector rather than the state was in the lead. $186 billion was to be spent on 2,700 projects, that were supposed to create 3-4.5 million new jobs. As soon as the plan was announced it was criticized for its lack of specificity. 

On May 23, 2011 it was reported that the central government was angry with the slow pace of its development plan. It said that there were some major projects that were behind schedule. Corruption and government inefficiency were cited as the reasons. Those projects that were not sticking to their timelines were going to have their funding cut, and be turned over to the provincial governments where they resided. The Iraq Central Bank was quoted as saying that the growth rate was “shameful.” The delays meant that the 5-year plan had to be revised.

Given all the problems that exist within Iraq’s state-run economy, it should’ve come as no surprise that its 5-year plan would have issues. Many large, multi-million dollar projects that were announced in years past have fallen through, and Iraq’s legal system is still unaccommodating to outside investment. The World Bank’s “Doing Business 2011” report for example, had Iraq ranked 166 out of 183 countries in ease of doing business. It noted that to get a construction permit required 14 steps that took an average of 215 days to complete, that importing and exporting materials was difficult and costly, and that credit was hard to come by.

Iraq’s institutional limitations are due to its history. For twenty years the country was cut off from the world economy due to sanctions and wars. The security situation has only recently improved to the point where the state can focus upon the economy. On the positive side, Iraq has plenty of money to spend due to high oil prices, and it is gaining increasing interest from foreign companies. It will take time for the bureaucracy to adapt to the new situation, and until then, the nation’s progress will be slow and even.

SOURCES

Adel, Shaymaa, “Iraq’s development plan to create 3.5 million new jobs,” Azzaman, 6/15/10

Alexander, Caroline, “Iraq’s Council of Ministers Backs Five-Year Development Plan,” Bloomberg, 4/27/10

Daood, Mayada, “what’s the plan? fears of renewed central control,” Niqash, 5/25/10

Dunia Frontier Consultants, "Foreign Commercial Activity in Iraq 2010 Year in Review," 2/5/11

Al-Sabah, “Five-Year, $200 Billion Development Plan for Iraq,” MEMRI Blog, 11/23/09

Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 4/30/11

Al-Wanan, Jaffar, “Delayed projects to be handed over to local councils,” AK News, 5/23/11

World Bank and International Finance Corporation, “Doing Business 2011 Making a Difference for Entrepreneurs,” World Bank, 11/4/10