Fiscal Year 2024
Capacity Development Activities
Central bank Operations (Oct 15-18)
At the request of the Central Bank of Iraq (CBI), METAC provided a four-day TA mission on domestic liquidity management and on developing an interbank market in domestic currency. The CBI has made significant progress since the initial TA mission in March 2023 in adopting an active domestic liquidity management to support the exchange rate peg. The mission reiterated the outstanding recommendations on domestic liquidity management and provided advice for fine-tuning, among others, to support OMO implementation that would encourage interbank activity. There is currently no interbank market in Iraq and the mission provided recommendations on the preconditions and basic features to kickstart an interbank market.
Financial Supervision and Regulation (Sep 18-22)
The mission conducted a workshop with the objectives to (i) build the capacity of the CBI supervisors to effectively monitor, supervise and regulate the Domestic Systemically Important Banks (D-SIB) and (ii) review the framework recently developed by the CBI to deal with D-SIBs. The workshop presented the concepts, the principles, the framework, the assessment methodology relating to D-SIBs and the supervisory measures recommended by the Basel Committee on Banking Supervision (BCBS) guidelines and best international practices. It also focused on how to supervise State-Owned Banks (SOB) and the challenges faced in dealing with these banks. This is highly relevant to the CBI banking system given that most of the D-SIBs are SOBs. The mission proposed enhancements to the framework with respect to classifying D-SIBs in line with BCBS guidance and experience of other jurisdictions.
Macroeconomic Frameworks (Dec 10-15)
With the help of TA provided by METAC and IMF headquarters (HQ), the Central Bank of Iraq (CBI) developed and operated a Macro-Framework Foundation Tool (MFT) to promote and bolster policy formulation. As a result, CBI is now well-versed to obtain timely and quality forecasts for internal and external sectors and levels of foreign reserves in response to various economic shocks including shocks to oil prices and other internal and external shocks. The tool is expected to enhance formulating monetary policies by gauging the impact of different shocks on economic sectors and, ultimately, safeguarding an appropriate level of net foreign assets.
Public Financial Management (Jun 13-15)
Jointly with the World Bank, METAC conducted a workshop in Amman/Jordan to design a roadmap for Treasury Single Account (TSA) implementation. The event gathered 30 participants from key stakeholders including the Ministry of Finance (MoF), Central Bank of Iraq (CBI), and six State-owned banks (SOBs). Participants developed an initial roadmap for TSA implementation, which will be overseen by the newly formed “TSA higher committee”. A census of more than 12’000 bank accounts has recently started and will continue in the coming months. A limitation for an efficient TSA will be the still limited roll-out of the recently procured core banking system. It is anticipated that development partner support, including from METAC, is required along key steps of the roadmap. The German development corporation Gesellschaft für Internationale Zusammenarbeit (GIZ) participated in the workshop as observer.
Revenue Administration (May 14-20; July 16-20; Oct 16-Nov 16; Nov 6-16; Dec 4-15; Jan 5-Feb 29)
An offsite capacity development mission (to Amman, Jordan) supported the Iraqi General Commission for Taxes (GCT) in assessing its readiness to apply the self-assessment system. Guidance was provided on the key features of self-assessment and on necessary steps towards the transition to a self-assessment system. An action plan for transitioning to a self-assessment system was also presented to the GCT.
An offsite capacity development (CD) mission assisted the Iraq General Commission of Taxes (GCT) on good practice in organizational design to modernize the organizational structure of GCT headquarter and regional offices. The mission addressed the importance of autonomy in public administration and advised to what extend an autonomous or semi-autonomous organizational structure would be beneficial for GCT. The mission developed with the Iraqi delegation a hybrid functional-based organizational structure, which will be reviewed by and discussed with the Ministry of Finance.
This joint METAC and IMF Legal Department (LEG) desk review assignment supported the General Commission of Taxes (GCT) of Iraq in (i) reviewing the current legal framework for tax procedures related to the self-assessment (SA) system; (ii) identifying, designing,, and drafting necessary legislative amendments to the Income Tax Law to support implementation of the SA; and (iii) reviewing the amendments with designated GCT officials to address questions or comments. This mission is deemed critical as the current income tax law only provides for administrative assessment and thus presents an obstacle for the effective transition to the SA system.
This mission was conducted offsite in Amman, Jordan, in collaboration with the IMF’s Legal Department (LEG). The mission (i) reviewed the current law of 1984 and the draft amendments prepared by the Iraqi authorities to identify gaps against international standards; (ii) suggested amendments to the customs law with respect to the implementation of risk management, authorized economic operators, post-clearance audits, and customs valuation. The mission also assisted the General Authority of Customs (GAC) to draft a function-based organization for GAC, and (iii) identified further CD needs in this area.
This joint HQ and METAC offsite mission to Turkey supported the General Commission of Taxes (GCT) of Iraq in developing a medium-term reform plan. The operational environment of the GCT has informed specific design criteria, leading to the identification of six core reform areas: (i) establishing a reliable taxpayer base; (ii) improving core functions through implementation of the self-assessment system; (iii) focusing on large taxpayers’ compliance; (iv) organizational design and workforce planning; (v) transitioning to a digital environment; and (vi) reform governance, as foundations of the plan. These were translated into specific and sequenced initiatives categorized for the short and medium term. It was recommended that all reforms should undergo a pilot phase within the Large Taxpayers Office and be accompanied by a corresponding restructuring of the workforce and by a simplified reform governance structure to manage the proposed plan. An integrated FAD/METAC mid-term capacity development plan was also developed and is currently under review by the GCT.
METAC provided a remote CD activity spread over eight weeks in continued support to the development of amendments to the Iraq Customs Law. METAC, in cooperation with IMF LEG, worked with the Iraq Customs Legal Working Group to advise on the content of amendments to the Customs Law and on determining timelines for the amendments to be finalized and submitted. This was achieved through multiple online meetings over the course of the period. The stretching of the remote CD delivery period allowed for internal discussion, comment, drafting and translation of the proposed amendments. Following consolidation of the amendments drafted in this remote mission, it is envisaged that an off-site mission will take place before the end of FY24 to assist in the finalization of the drafts.
Real Sector Statistics (Jul 2-12; Aug 13-17; Nov 26-28)
Following up on the mission held in February 2023, METAC assisted the Central Statistical Organization (CSO) of Iraq to progress significantly in the production of 2018 Supply and Use Tables (SUTs). The July 2023 mission helped with balancing the supply and use of all products and move the compilation exercise into the final validation and dissemination phase.
METAC assisted the Central Statistics Organization of Iraq to improve the residential property price indexes (RPPIs). The mission advised on applying hedonic regression techniques rather than stratification methods, which require significant effort and result in many unreported strata in the survey. Training was provided on using online listings, including how to collate and tidy them, how to analyze them, and how to calculate the resulting RPPIs.
METAC assisted the Central Statistics Organization (CSO) of Iraq in creating an experimental CPI compilation system based on chained short-term relatives and geometric means in Excel. The new compilation system was tested on real data from August 2023, and the results compared to those generated by the current system. CSO plans to introduce the new compilation system in early 2024.
