Dr. Muhannad Hamid Mahidi/University of Anbar.

Executive Summary:

There is shortsightedness in the Iraqi state, as its intervention in economic life through expansionary fiscal policy has increased significantly since the change in 2003, and thus the state has moved away from the supposed corrective role.

The new role of the international financial institutions in assuming a set of conditions in return for granting loans, led to the creation of unproductive parasitic layers and segments, working to absorb the financial capabilities of the state and society, and striving to integrate the Iraqi economy with global capitalism according to the open market perspective, by giving a greater role to the private sector to manage the economic file.

The reforms that the IMF imposes on developing countries are not suited to their economic environment and are often not viable.

Radical reform requires an empowered national economic administration, as well as an administrative apparatus in ministries characterized by a national character away from suspicions of corruption and quotas, as well as the social contract based on an amended or new constitution.

The current economic crisis requires initiating economic reforms aimed at expanding the productive base, ensuring a more equitable distribution of income and wealth, developing human resources, and taking care of the most affected social groups.

Partisan agendas control the economic reality and attempt to adapt it to serve factional interests at the expense of the public interest still constitutes an obstacle to the desired economic reform process in Iraq.


The political change in Iraq in 2003 produced a new reality for the Iraqi economy towards a market economy. After an era of more than forty years. The state’s economic pattern oscillated between the central planning system and state capitalism at a certain stage. And between the state’s withdrawal from some economic activities in other stages. The period of war, international economic sanctions, and isolation from economic developments in the world were often the reason for adopting shabby and hybrid economic patterns, which created an economic reality based on isolation and retreat with the adoption of primitive business practices. In light of those economic conditions and the political and social conditions, the state of political transformation has led to a change in the economic system towards a market economy that is better able to absorb and cross those decades of economic decline in accordance with the rule of economic patterns and societal behaviors, which reduce the ability to manage the transformation smoothly.

The first axis: the implications of economic reform in Iraq after 2003.

Following the events of April 9, 2003, the Coalition Authority imposed a new economic policy, the approach towards a market economy. Developing a liberal economic system after a period of time in which the directives of the central administration dominated the economic aspect, by putting in place laws and legislation that included freedom of economic activity and taking measures and procedures that affected many areas; To activate market mechanisms and tools.

This prompted the Iraqi government to conclude several agreements with the International Monetary Fund and the World Bank in 2004, to try to find a solution to the problems represented by the low production of the main agricultural and industrial sectors, the deterioration of public services such as water and electricity, and the decrease in private and public investment. In addition to the very high prices and others, through the application of economic reform policies in Iraq in light of the structural crisis affecting the Iraqi economy. After Iraq obtained approval for the emergency aid program for the post-conflict phase of the International Monetary Fund, (18) member states (Paris Club) agreed in 2004 to cancel (80%) of the debts owed to them by Iraq, amounting to (130) billion dollars.

Therefore, Iraq sought to adopt the specifications of international financial institutions; to get out of the crisis that swept its economy, such as: the external debt crisis, and the sluggish government sector with Featherbedding, forcing the political and economic elites to accept the economic reform program.