ERBIL, Kurdistan Region – Iraq’s autonomous Kurdistan Region needs an extra $1.4 billion this year to stabilize an economy that has been knocked over by a flood of war refugees from Syria and other parts of Iraq, a World Bank report said.
It said that economic growth has contracted 5 percentage points and poverty rates have more than doubled from 3.5 percent to 8.1 percent, as the Kurdistan Regional Government (KRG) struggles with the burden of accommodating the 1.4 million refugees and internally displaced people (IDPs).
“The stabilization cost for 2015 is estimated at US$1.4 billion in additional spending above and beyond the KRG budget,” said the joint report by the World Bank and the KRG, released on Thursday.
“This estimate could get much higher depending on how long the crisis persists,” it warned.
The study noted that prices and unemployment have increased, wages have been pushed down because of refugees and IDPs entering the labor market and that a surge in violence had led to supply side shocks.
It said that trade, transportation and investments had been hit hard because of the war with the Islamic State (ISIS), which controls roughly a third of Iraq.
“The ISIS crisis has had a significant effect on trade of goods and services. Transportation routes were disrupted. Foreign direct investment flows have declined and operations of foreign enterprises have been adversely affected. Disruption of public investment projects have had a negative impact on the economy,” the study said.
It added that, while the KRG has been responsive to addressing the needs of the displaced population up till now, more resources are needed to avert a humanitarian crisis.
Due to the wars in Iraq and neighboring Syria, the “population increased by 28 percent placing strains on the local economy, host community, and access to public services,” the report quoted KRG planning minister Dr. Ali Sindi as saying.
He said that the KRG “cannot address this big scale humanitarian crisis on its own. Greater support from the national and international partners will be needed to rise above this humanitarian crisis and meet the needs of the displaced.”
The KRG itself noted in an earlier report that “competition for resources has been greatly affected – resources which are limited. For those refugees living outside camps and in the community, the overall demand for housing, schooling and jobs have increased.”
That study added: “The ability to supply this has not matched the demands so logically the availability of places for homes, schools and jobs has precipitously decreased, depressing wages and personal income while in turn vastly raising/over-inflating the cost of living (rent, etc). This in turn gives way to exploitation.”
It also noted “a reportedly sharp increase in antisocial behavior,” such as petty crime, prostitution, larceny and begging, attributing them partially to “refugees being in an unfamiliar environment with strained economic resources.”
The Kurdistan Region – whose own local population is some 5 million -- has repeatedly said it cannot alone face the overwhelming numbers of refugees.
Visiting refugee camps in Kurdistan late last month, Hollywood superstar Angelina Jolie appealed for greater international help for the displaced. She warned that “the international community is failing.”
