Financial crunch has cost Kurdistan over $10 billion, report
ERBIL, Kurdistan Region— The ongoing economic crisis has cost Kurdistan region an estimated $10 billion since 2014, according to a new report on the financial downturn that hit the region following the drop in oil prices and the ISIS war.
The report, produced by the Kurdistan Investment Union, also warns that the cost could climb over $15 billion by the end of this year, if the crisis continues.
“We have had investors who went completely bankrupt over the past two years because of the sudden halt of the economic growth in Kurdistan,” said Yaseen Mahmoud, a spokesperson at the union.
According to Mahmoud some 500 small and middle size businesses have declared bankruptcy while hundreds more have been “severely” affected by the economic stagnation.
“These are colossal losses for the relatively fragile economy of Kurdistan,” he told Rudaw.
According to the data made available by the union, the private sector has laid off around 330,000 full and part time employees over the past two years due to the cash crisis, which has pushed over 80 percent of the projects to an almost complete standstill.
The report comes amid Kurdish authorities sever austerity measures and government reforms that are planned to revive the economic growth by investing large sums in the private sector.
The Kurdistan Regional Government (KRG) has said that it will help the private sector to become a more attractive employee in the region with enhanced access to the banking system and insurance services.
According the KRG reports, only 3 percent of the private companies and businesses in the region currently use the available services in the banks often due to business owners low confidence in the banking system.
The government now hopes that by investing some $5 billion in the private sector it could move large parts of the government employees to the private sector where they can enjoy similar state benefits such as pensions and paid holidays.
The private market in the Kurdistan region has been notoriously unregulated with almost no taxation or protecting labor rights.
The insecurity at the private sector has prompted the bulk of the labor force to seek government employment with considerably lower wages.
Around 1,5 million salaries are paid by the KRG to, among others, civil servants and the retired which has so far amounted to 75 percent of the government’s annual budget.
Authorities now hope that the government reforms will reignite the two-digit economic growth that the region experienced before the double shock of ISIS war and oil prices.
The report, produced by the Kurdistan Investment Union, also warns that the cost could climb over $15 billion by the end of this year, if the crisis continues.
“We have had investors who went completely bankrupt over the past two years because of the sudden halt of the economic growth in Kurdistan,” said Yaseen Mahmoud, a spokesperson at the union.
According to Mahmoud some 500 small and middle size businesses have declared bankruptcy while hundreds more have been “severely” affected by the economic stagnation.
“These are colossal losses for the relatively fragile economy of Kurdistan,” he told Rudaw.
According to the data made available by the union, the private sector has laid off around 330,000 full and part time employees over the past two years due to the cash crisis, which has pushed over 80 percent of the projects to an almost complete standstill.
The report comes amid Kurdish authorities sever austerity measures and government reforms that are planned to revive the economic growth by investing large sums in the private sector.
The Kurdistan Regional Government (KRG) has said that it will help the private sector to become a more attractive employee in the region with enhanced access to the banking system and insurance services.
According the KRG reports, only 3 percent of the private companies and businesses in the region currently use the available services in the banks often due to business owners low confidence in the banking system.
The government now hopes that by investing some $5 billion in the private sector it could move large parts of the government employees to the private sector where they can enjoy similar state benefits such as pensions and paid holidays.
The private market in the Kurdistan region has been notoriously unregulated with almost no taxation or protecting labor rights.
The insecurity at the private sector has prompted the bulk of the labor force to seek government employment with considerably lower wages.
Around 1,5 million salaries are paid by the KRG to, among others, civil servants and the retired which has so far amounted to 75 percent of the government’s annual budget.
Authorities now hope that the government reforms will reignite the two-digit economic growth that the region experienced before the double shock of ISIS war and oil prices.