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Public Finance Management as a Driver of Instability in KRG. By Mohammed Hussein*


The Kurdistan Regional Government (KRG) stepped into 2022 with not enough cash to pay the December salaries of civil servants and pensioners; delayed to January 2022. Now, at mid-March, civil servants are going on strike and taking to the streets of Sulaymaniah to demand their February salaries.

The evidence on the ground shows that the government developed a clear set of reform policies, and a special law was passed to reform public finance management (PFM) that has been followed in recent years. Nevertheless, there is no evidence that these reforms were implemented. The government did not demonstrate its following of better practices although there have been an observable opportunity and available political and institutional capacity to do much better. As a result, the government is still struggling to meet growing demands for services and allocating resources according to policy priorities.[1]

This article aims at evaluating the KRG’s PFM in 2021 and estimating the economic consequences of neglecting the reform of law and policy.

Conventional objectives of PFM are known as aggregate fiscal management (making sure not to accumulate too much debts); maximizing the mobilization of resources and allocating them according to policy priorities; ensuring the value of money in services-delivery with the best combination of efficiency, effectiveness, and economy; and finally financial governance that has transparency and accountability by putting rules, procedures, and practices in place to achieve the entire four goals (Parry). Each government has a different strategy in prioritizing any of these objectives. However, successful PFM basically pursues all of them simultaneously. Thus, the article assesses the KRG’s PFM from the perspective of the aforementioned objectives.

[1] The KRG’s finance ministry announced on its website a reform agenda that includes reducing debts, diversifying the economy, and improving business enabling environment;

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Mohammed Hussein paper-IEN final editig

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