Campaigning on the election trail has been forced to take a back seat will the president ial candidates ever hit the road and so their brand of politics to americans before the vote followed the u. S. Elections. Will be. Seen. After months of antigovernment protests and Political Uncertainty iraq is now grappling with the worst fiscal crisis in decades. Iraqs economy and state budgets are heavily reliant on oil income and have been hit hard by the sharp decline in Global Oil Prices the world bank has projected g. D. P. To contract by 9. 7 percent of the fiscal deficit expected to reach almost 30 percent of g. D. P. Iraqs new only appointed government led by most of the me is now faced with a challenging task of implementing long overdue Structural Reforms such as reducing Public Sector employment while also keeping popular unrest at bay im so want to get out and as iraqs fiscal crisis deepens we ask what needs to be done to address it and how can the new government overcome entrenched political interests that oppose reform while also winning over a public that has lost trust in the political establishment. The World Bank Special representative to iraq talks to aljazeera. Special representative for the bank in iraq thank you for talking to aljazeera the world bank recently put out a new report on iraq in which it warned that the economic crisis was the worst the country has seen since the fall of Saddam Hussein in 2003 can you walk us through how we got to this point i think at the good times for the. And actually the report has reflected very clearly the situation that were in at this point in time and which is actually in a communication of of events that started in 2 seldom 3 of course. The the the crisis that have hit iraq. Would have petered lee coming up a different instances in 21415. 00 where we had the drop of oil prices then the die which has actually flicked a lot of damages on iraq not only in terms of reconstruction but also in terms of economy so he was hit by both crisis. But isis as well. Then the iraq that ideally 2 would be covered out of there unfortunately the policies that would use then would in that in that i place and of course that has actually led to the protests that we had in october and the 2 that is ignition of the government and those protests were actually coming out of crisis and out of problems that they needed off of bush sort of his delivery of local jobs on missing only employment especially in a in a society that is mostly built around young people so they had a lot of expectation that unfortunately would not fulfill and all of this actually was compounded by because with 1000 prices that iraq and the drop that 3 men the prices of chemical so all of these elements just actually accumulated all over to end up in the situation that we are at this point in time it seems that we are repeating the same situation over and over is the government not taking the necessary action to really address some of these structural issues its a truly as i said at the beginning its a kind of good relations to all the governments that came into office had to deal with this situation as it is and unfortunately that wasnt the kind of a vision that was put in moving very for the process forward to that has been structured issues that existed since minute one. A bit enlarged and a bloated Public Sector based on the perception of people. Looking at employment as being stuff within the government itself to the to the to the people around it to the country and the generally Public Sector is a safety net for people its a celery its a pension not only for you but even for you to avoid was and so that has been lot of things and help has just. Flicked a lot of a budget problems and lot of actually expenses on the on the burdens of the of the government itself you mentioned the Public Sector which is one of the hottest issues if we just look at how it has evolved over the years in 2004 the public wage bill was 7 percent of Public Expenditure that grew to 27 percent in 2014 and now its almost 50 percent of the states budget realistically as a government how do you go about cutting salaries reducing Public Sector employment when that is such a big part of employment in general and also when government jobs realistically i used to buy political support. Of course this is a very difficult situation at this point to them because people feel that this is an entitlement and as i said the beginning people look at it as part of the culture so employment is looked at and linked to Public Sector employment we have we have talked a lot and i think it is the perception of governments that there should be ever speak asian there should be a way of looking at how to move people within their mindset as well as within practice away from the Public Sector into the private sector so that brings us to the question of creating the could use of environment for private Sector Investment because the private sector is the sector that creates jobs that brings in investment into the place and i think this is where there is a kind of where a lot of elements should come into play so if we want to look back at restructuring the Public Sector we need to create an alternative which is creating jobs outside the Public Sector within the property. Therefore we need to create an environment that allows but ive detected invest or top of that we have i think to include lot of elements that would come into a regulated process so people would understand that moving out of the public into the private would keep their benefits allow distance food off of benefits the portability of benefits as we call it so this is where we actually helped at one point in time to go for a unified pension law in iraq which brings both public and private into the same place people start understanding within that if you of looking at the public and the private sector that they are almost the same in terms of looking one at the pension and most importantly looking at the salary scale between the 2 that much is sure people start having the option of moving from one to another so i think this is where we have to start thinking of restructuring the Public Sector in that process so its not only reducing its not only cutting the benefits but maybe on the other side to create that will to not give so that people start feeling that they have the option but of course this is very difficult to do especially because the protests that we have seen in iraq over the past few months one of the major grievances was the lack of employment to be eliminating Public Sector jobs in this kind of environment is very difficult but if we just look at the figures of for example in april the government earned 1400000000. 00 in oil and come thats about 3 1000000000. 00 short of what it needs just to cover public salaries we have heard the Prime Minister mr falcao them recently announced that he would be cutting salaries of higher level Public Sector workers is that enough or does the government really need to look at reducing overall employment in the Public Sector. That is the statement that the government decides on but what we can say is that basically the bank we have done a lot of studies that the government is looking at in terms of looking at the size of the Public Sector and the expenses. That includes on the government due to that to that inflate that size of the Public Sector in terms or looking at the governance the way this Public Sector is that on looking at the institutions looking at structured and of course including into that all of elements that are essential for Good Governance for a good performing Public Sector i. E. Referring to the question of corruption to the question of looking at good processes that are put in place and of course all of this implies one of good implementation of what is being done so projects are done properly people are benefiting from sort of says extremely poor people benefiting from those students 1st because there is a transparent in very clear technical process that allows these benefits to get to these people so all of these actually elements come together in looking at the form of the Public Sector itself know what the government is going to go into is something that the government decides according to their own priorities of course and understanding very well what is the political environment that allows for that to move forward and of course in that there is not only the political elite and the parliament that will be looking at this but its also the street the protesters that will be looking at any step that the government will move into that kind of early forward and try to see how credible is that so that they can actually comply or probably not the thought more about that political environment because i think thats very important of course any kind of reform proposed by the current government would have to be voted on in parliament a parliament that has very much resisted any substantial reform as demanded by the protesters so realistically how can this government go about implementing some very unpopular reforms Going Forward the government at the end of the day knows very well the political environment and im sure very well aware of the dynamics that exists and im definitely in no position to describe that but what i can see from the side of the bank is that we have provided and we are ready to provide all the essential support that is needed from the technical side. Because this is where they come the bank comes really with the with the expertise it has building on other experiences and other Lessons Learned from other countries and the word and try as much as possible to adapt it to the iraqi situation of course in consultation with the government then with other with other players and try to see what works best so we offer options and it is really up to the government to decide on how to move forward of course were bringing evidence based were bringing technical were bringing numbers and statistics looking at the situation that exists and i think this is where the government could engage with the policymakers with the parliament and try to see how move it in the best way possible and of course taking into consideration what the people want because at the end of the day were looking at the day that is increasing were looking at an employment that is increasing and again going back to a Younger Generation that is expecting a lot it has waited a lot it has been deceived a lot so i think now it is the time to give them at least a positive signal that things would move in that or that action and youve mentioned youve put forward options youve also met with the Prime Minister youve met with the finance minister what are the options that youre discussing and what kind of support is the government requesting from the world bank what i can say is that the bank has actually engage with the government of dr abdul mehdi in that the signing of a member of the standing which actually highlighted the Main Elements of the process that needs to be put on the table highlighting 3 main pillars mostly the looking at the diversification of the economy looking at working to create an enabling factor for the for the private sector to come into investment and thirdly that as much as possible to see how we can build the capacity of the government toward closely with the private sector in moving things forward in a partnership what needs to be done to kickstart the private sector. There are a lot of things that have been put in play into doing business doing business is the ring as much as by. Simply create the essential elements that would encourage private sector to come in invest starting with simple policies looking at the visa issuance looking at the establishment of a Company Looking at the possibility of starting a basic services that the Company Needs all the way up to looking at the institutional requirements that we get out of the proceeds laws in land so all of these are elements that would if adjusted well and put in place allow the private sector to be encouraged but these are also things that i have heard time and time again over the past years why have these reforms not already been implemented because they have previously been recommended by the world bank by other institutions so what has been the delay here that has been a lot of changes this place actually has seen a number of carbons come into into office and unfortunately sometimes it will happen that any new government comes in the discussion is a bit discontinued and we have to start probably from scratch again maybe adjusting it according to the directions that the government has and of course not to mention that there have been a lot of crises that have hit this place at the time when we have reached somehow equate advanced age. Then we had to wait or probably sidelined a bit to try to see how we can manage the situation thats happening we can see now a commitment to move forward i think at full conviction that private sector should be encouraged to come and invest we have to make sure that we can support the government and do that and of course throughout the process we need to make sure that we are providing what is needed as a government and helping the government to do that to the extremely poor in 1st of all providing them with what is needed secondly improve their Service Provision and most importantly work on the Human Element in iraq work on the Human Capital we have to keep in mind and we have to keep focused that there are a lot of people that need to be supported and lot of people that need to be brought in to safety away from poverty. Talking about the social safety net of poverty the world bank has warned that poverty rates could up to double as a result of the most recent economic crisis but actually the government does spend quite a significant amount of its budget on social welfare including for food rations for Social Security what can be done to make this support more efficient so that it actually reaches them the most important actually has an impact on the population there are a lot of systems for support and social assistance in the space and its coming from different ministries in addition to the fact that there are a lot of programs of social assistance that we need to think that they would be to move into a kind of a much more targeted approach so make sure that all of these resources are focused on those who need it the most so instead of just going into programs that are big and actually just throwing or at least dispersing money in Different Directions try to focus on making those programs getting those who need it the most is there a lot of public waste because if you spend 14 percent of your budget on Social Security there should be an impact right of course and thats thats why again you have a lot of of probably lot of misuse the resources if i may say so we need to restructure this we need to look at these programs and probably try to consolidate it based on the fact that were looking at a good database of those who are in need keep that database live in the sense that it is updated continuously but most importantly its not a question of just assisting people its a question of trying as much as possible to move these people away from poverty so this is where the other supporting programs that would help people get out of poverty come into play creating jobs opening up opportunity giving michael credits working or drool environment to create to revamp the Agriculture Sector so all of these elements that would come into a socialist. That would help actually focus more and more on those in need fiscal space for the government instead of being somehow abused in a sense to be put in those productive projects that would get jobs and actually help people. Now when i speak to some officials in government some of them voiced concern that they believe that the support from the world bank is too theoretical they say that they want support that will actually result in real changes on the ground because the the reform areas that youre trying to address it appears there is no really long Lasting Impact that the same issues come up over and over again so what lessons can you draw from these past programs to make sure that any kind of reforms Going Forward take root within the state and actually have an impact on the ground. Let me let me get to that in a minute but let me just highlight that basically the bank is not only into the support on the financial front as you describe it through those what we call it Development Project loans but just to say that the portfolio of the bank in iraq is off 2000000000. 00 so we have a number of projects that position in terms of delivering services in terms of working on the construction in terms of working on the form of situations so its a 2000000000. 00 portfolio on these projects just to see that this is not theoretical put the put the sense of the way you describe it so but im talking specifically about fiscal stabilization programs or maybe let me read to you. An excerpt from your own internal evaluation of one of these programs in 2010 the report read the experience demonstrated policy operation cannot work well in the high risk environment when governments are motivated by fiscal stress but that the sustainability of achievement is uncertain if the fiscal stress is removed. Can you co