The Government of Iraq, the World Bank Group, and the European Union signed today a grant agreement aimed at strengthening the Government of Iraq’s institutions and mechanisms of fiscal accountability and oversight at federal and sub-national levels.
The project titled “Strengthening Public Financial Management (PFM) Oversight and Accountability Institutions” will benefit from jointly implemented US$12.5 million and is part of a technical assistance grant program signed back in September 2018 with the European Union to strengthen public financial management (PFM) oversight and increase the efficiency of public service delivery.
The program aims at improving PFM systems by strengthening payroll management through an IT platform. It will support transparency and accountability in the oil sector through the Extractive Industry Transparency Initiative. It will foster the anti-corruption agency which can help retrieve stolen assets and the auditor general as well as support the reform of State-Owned Enterprises. Other features will be strengthening procurement systems through e-procurement and supporting integrity in reconstruction programs. The project will also assist in further tackling revenue mobilization and fiscal federalism and can be revisited in one year to align further with government priorities.
This project compliments the ongoing World Bank-financed project titled “Modernization of Public Financial Management Systems” of US$41.5 million, which aims to improve financial information management and transparency, cash management, public investment management and public procurement modernization at selected federal and governorate agencies.
“Now, more than ever, the importance of a strong public financial management system is critical”, said Ramzi Afif Neman, Head of World Bank Iraq Office. “The World Bank is committed to helping equip the Government of Iraq with mechanisms of fiscal accountability that are essential for sustainable reform, creation of a positive economic impact, and the restoration of public trust in the country’s financial institutions.”
“The efficient management of public finances and the delivery of services is critical in the achievement of public policy objectives, as well as for restoring the trust and social contract between Iraqi citizens and the country’s institutions”, said Martin Huth, European Union Ambassador to Iraq.
The project will support economic governance reforms at the federal level and in the Kurdistan region through technical assistance to many fiscal agencies, under the guidance of the Federal Ministry of Finance and the Prime Minister’s office. The project is in line with the economic reform “White Paper” recently published by the Government of Iraq which supports the overall World Bank Group’s development objectives and portfolio in Iraq. The project is also in line with the SDGs and European Union’s development objectives.
An Education Reform Path for Lebanon
Lebanon needs to urgently embark on a comprehensive reform agenda that puts students at the center of the education sector and prioritizes quality of education for all, according to a new World Bank report released today. Low levels of learning and skills mismatch in the job market have put the future of generations of Lebanese children at risk and imply a critical need for more and better targeted investments in the sector.
The report, titled “Foundations for Building Forward Better: An Education Reform Path for Lebanon”, presents an overview of key challenges facing the education sector. It provides evidence-based solutions founded on a diagnostic of the factors contributing to the learning crisis and proposes policy reform recommendations over the short- and medium- to long-terms. The proposed reform plan is in line with the objectives of the Ministry of Education and Higher Education’s 5-year draft sector plan, which aims to improve equity, learning outcomes, and governance in education. The report also draws from the latest available education sector research, including studies conducted under the Research for Results Program launched back in 2016.
The compounded crises that have assailed Lebanon over the past several years –Syrian refugee influx, economic and financial crisis, the COVID-19 pandemic, and the Port of Beirut blast– have all put severe strains on an already struggling education system. Pre-COVID-19 learning levels were already comparatively low, with only 6.3 years of learning taking place, after schooling is adjusted for actual learning. The global pandemic has led to extended school closures since March 2020, which will likely result in a further and significant decrease in learning. Effectively, students in Lebanon are facing a “lost year” of learning. Despite efforts to reopen schools, a more systematic approach for planning at the district level, in close collaboration with regional education office directors, is needed as the response requires local solutions.
“Lebanon needs to urgently reform the education sector and build forward better,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “Now more than ever, Lebanon needs to invest more and better in improving learning outcomes for children and making sure Lebanese youth are well equipped with the right skills required by the job market to enable them to contribute to Lebanon’s economic recovery”.
The multiple crises and the resulting increase in poverty rates, with more than half the population likely below the national poverty line, have also directly impacted demand for education and student retention. The contraction in the economy, plummeting purchasing power and the steep deterioration in living conditions will likely lead more parents to shift their children to public schools in the coming years, as well as higher student drop-outs, especially among marginalized households. The report presents key aspects for restructuring the education sector financing in support of a more efficient and equitable system and to prevent further learning loss.
The report puts forward for discussion sector-wide mid-term reform recommendations across seven key strategic areas: I) Restructuring Sector Financing; II) Diagnostics to Support Overcoming the Learning Crisis; III) Improvements of Teacher Utilization and Quality of Teaching; IV) School Environment and School Accountability Measures; V) Education Strategy and Curriculum Reform; VI) Early Childhood Education; and VII) School to Work Transitions and Youth. These recommendations for action tackle key challenges within the sector and approaches towards addressing the growing learning crisis and meeting the increased demand for public education in the country while regaining equity and efficiency.
Financing to Support Reforms for Inclusive Growth and Development
The World Bank approved the second in a series of three single-tranche Inclusive Growth Development Policy Operations (IGDPO) to support key reforms for enabling inclusive growth in Liberia. The financing, amounting to $40 million, comes in the form of an International Development Association (IDA) concessional credit of $20 million and an IDA grant of $20 million to be disbursed as budget support. The underlying reforms being supported seek to remove distortions in selected sectors, strengthen public sector transparency, and promote economic and social inclusion.
“The continued implementation of critical policy reforms in sectors such as energy and agriculture helps create a conducive environment for transformative investments being made in these sectors by the Government, with support from development partners,” said Dr. Khwima Nthara, World Bank Liberia Country Manager.
Building on reforms supported under the first reform program approved last year, the key reforms under this second program are expected to help increase agriculture productivity by promoting farmers’ access to certified seeds; reduce power theft and commercial losses at the Liberia Electricity Corporation (LEC) by making electricity affordable for the small consumers with the reduction in electricity tariffs for poor households from $0.385/kWh to $0.22/kWh in May 2021; streamline and increase the transparency of tax waivers and in turn, improve revenues to enhance the provision of public services, especially for poor households; strengthen the oversight and transparency of State-owned Enterprises (SOEs); promote financial inclusion through the amendment of the Payments Act and introduction of digital credit; and finally, create an efficient, transparent and sustainable Social Safety Net System.
“Strengthening Domestic Revenue Mobilization, through reduction of duty waivers and tax holidays, is critical to expanding fiscal space for increased public investment that is domestically financed,” said Mamadou Ndione, World Bank Senior Economist and Task Team Leader of the IGDPO program.
The reform programs being supported are aligned with the Liberia’s Pro-poor Agenda for Prosperity and Development and the World Bank’s Country Partnership Framework.
Latin America and the Caribbean: missing the chance to invest in a sustainable recovery?
A new platform showcasing real-time data from 33 countries in Latin America and the Caribbean has revealed that on environmentally sustainable post-COVID-19 spending, Latin America and the Caribbean lags behind the rest of the world: 0.5 per cent of total spending and 2.2 per cent of long-term recovery spending was environmentally friendly in 2020 compared to 2.8 per cent and 19.2 per cent globally.
The tool, which is based on the Global Recovery Observatory, an initiative led by the Oxford University Economic Recovery Project (OUERP), and supported by UNEP, the International Monetary Fund and GIZ through the Green Fiscal Policy Network (GFPN), reveals that only six of the region’s 33 countries dedicated more than 0.1 per cent of their GDP to recovery spending. A small number did allocate a significant proportion of their budgets to post-COVID-19 efforts, including Chile (14.9 per cent), Saint Kitts and Nevis (13.3 per cent), Saint Lucia (11.3 per cent), Bolivia (10.5 per cent) and Brazil (9.26 per cent).
The examination of over 1,100 policies shows that approximately 77 per cent of the region’s total spending of USD 318 billion was allocated to rescue measures addressing short-term threats and saving lives, while only 16.1 per cent has focused so far on long-term recovery plans to revitalize the economy, given the limited financial resources of many of the region’s countries. On average, Latin America and the Caribbean has allocated USD 490 per capita expenditure to post-COVID-19 recovery, compared to USD 650 in Emerging Markets and Developing Economies, and USD12,700 in advanced economies.
The region has been severely affected by COVID-19. Home to 8 per cent of the world’s population, Latin America and the Caribbean has reported some 29 per cent of deaths from the pandemic, while it is estimated that in 2020, the region had a GDP contraction of 7 per cent.
“I applaud the initiative of Latin American and Caribbean ministers to track their progress towards greener recoveries. Our Tracker shows that overall, the region’s green spending does not yet match the severity of the triple planetary crises of climate change, biodiversity loss and pollution,” said Piedad Martin, Acting Director of UNEP’s Regional Office for Latin America and the Caribbean. “In order to transition to more sustainable and inclusive economies, nations in the region must build from this good start of tracking to further align their development priorities with green recovery.”
To date, according to the Tracker, a higher proportion of the region’s recovery budget has been spent on unsustainable sectors (USD 7.4 billion) than on environmentally-sustainable initiatives (USD 1.5 billion). 74 per cent of environmentally-negative spending has been directed to fossil energy infrastructure, and 13 per cent to unsustainable port and airport infrastructure, which is expected to lead to an increase in carbon emissions.
“The situation of the region is dire, the response to the pandemic is leading us to an increase in debt, limiting our capacity to direct investments to environmental sustainability. Yet, placing climate action as the engine of recovery has never been as important. Our survival and the competitiveness of the region is at stake due to climate change,” said Costa Rica’s Minister of the Environment and Energy Andrea Meza, who will chair the XXIII meeting of the regional Forum of Ministers of the Environment in 2022. “I call on governments, the international community and the private sector to support Latin America and the Caribbean in responding to this crisis through investments that allow us to meet the Paris Agreement.”
High-impact chances for the region are numerous and require a mix of policy measures. Key opportunities await in sustainable energy, in particular non-conventional renewable energy and energy efficiency; investments in zero-emission transport –with a special focus on public transport—; investments in nature-based solutions to ensure adaptation in key sectors, such as agriculture, and urban centres, where most of the population lives.
“The region has reached an economic crossroads. Either governments continue to support the old, dying industries of the past or invest in sustainable industries which will drive future prosperity. The new economic opportunities for the region are monumental and wise leaders will embrace them,” said Brian O’Callaghan, lead researcher at the Oxford University Economic Recovery Project.
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