Economic and social policy set as a unified and coordinated package had been formulated within agreements between the Iraqi government and the United Nations, World Bank and the IMF; mainly through the International Compact with Iraq and Standby arrangements. A host of policies/measures, institutional changes and benchmarks, included in these agreements, had been implemented/met during the period 2003-2007/2008. Analyses and figures, in this paper, on such variables as economic growth, inflation, employment, poverty, etc. have indicated weakening trends, signifying, inter alia, low effectiveness of the elements/tools of economic policy and institutions in influencing developments in these essential variables. Policy effectiveness has been greatly reduced by instability, terrorist attacks and corruption. Signs of political reconciliation, lower violence and public investment recovery in the first half of 2008, however, could contribute to more stability, better economic/social trends and improved policy effectiveness.