Volume 1 Cedric - revised luca Final - RUIG-GIAN

2.5. PerspectivesDespite devastation caused by the war and the relatively slow political and rebuildingprocesses, Iraq has embarked on a new path for political and economic transformation. Awide consensus among Iraqis has appeared for an open and competitive market-basedeconomy, driven by the private sector. The process of recovering Iraq's historically vibranteconomic life has yet to be implemented in laws, regulations, and policies.The new direction the country has set out for the medium to longer run is articulatedin the National Development Strategy (NDS) for 2005/2007, setting out the main goals ofthe country's economic reform policies. The NDS aims at economic reform, based onpromoting the free market economy to achieve growth, while managing the social impactto ensure equity. Four main areas of work are outlined in the NDS, and presented below. 712.5.1. Enhance the role of the private sectorThe private sector is seen as the primary engine of economic diversification in Iraq.Realizing this vision will require institutional and legal changes to create the properenvironment. For the private sector to flourish, security must be established, the rule of lawstrengthened, and an efficient payments system and a diversified financial sectordeveloped. All quantitative and qualitative restrictions and sanctions which hindergeographical movement among different economic sectors must be removed.The private sector will perform a critical role in Iraq’s sustainable reconstruction anddevelopment process through the initial reconstruction effort. The Government mustestablish a regulatory environment capable of accommodating the private provision ofinfrastructure, thus allowing for the provision of essential infrastructure in a fiscallysustainable manner. The Government must also ensure basic public services and utilities.Well-functioning and efficiently-priced infrastructure will enable private sector growth. A“one stop” approach to investment facilitation is being considered, which should provebeneficial in facilitating investment and reducing initial costs of setting up and doingbusiness in Iraq. The Government will seek to streamline the process of licensing newbusiness.2.5.2. Develop human resourcesThe State must use its considerable financial resources to play a vital role indeveloping human resources as an investment in the present as well as in the future. Socialservices such as health, education and vocational training must be enhanced. Vulnerablegroups in the Iraqi society expanded due to war and sanctions, with their resultantdestruction and poverty. A comprehensive social aid network to protect these vulnerablegroups must be put in place.2.5.3. Strengthen the capacity of governmentalinstitutionsThe key challenge for public sector reform in Iraq is to strike a balance betweenemergency management and more long-term work. The strategy is aimed at diminishingthe size of the government over the next three years. The Government, however, willcontinue playing a dominant role in economic activity over this period, and will play a key71 MoPDC: "The National Development Strategy 2005/2007", October, 2004.60