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Report No. 94032-IQ Public Disclosure Authorized (DRAFT) KURDISTAN REGION OF IRAQ ECONOMIC AND SOCIAL IMPACT Public Disclosure Authorized ASSESSMENT OF THE SYRIAN CONFLICT AND ISIS CRISIS Public Disclosure Authorized Public Disclosure Authorized The World Bank KRG Ministry of Planning ii Currency Equivalents (Exchange Rate as of February 7, 2015) Currency Unit = Iraqi Dinar (ID) US$ = ID 1,166 ID = US$0.000858 Fiscal Year January 1 – December 31 Vice President: Hafez Ghanem Country Director: Ferid Belhaj Global Practice Manager: Auguste Tano Kouame Task Team Leader: Sibel Kulaksiz iii ABBREVIATIONS AND ACRONYMS CCCM Camp Coordination and Camp Management CPI Consumer Price Index EIU Economist Intelligence Unit ESIA Economic and Social Impact Assessment EU European Union FAO Food and Agriculture Organization GDP Gross Domestic Product GDRB General Directorate for Roads and Bridges HH Household IDPs Internally Displaced Persons IMF International Monetary Fund IOM International Organization for Migration IHSES Iraq Household Socio-Economic Survey IPP Independent Power Producers IRP Immediate Response Plan KRG Kurdistan Regional Government KRI Kurdistan Region of Iraq KRSO Kurdistan Regional Statistics Office MDER Minimum Dietary Energy Requirement MENA Middle East and North Africa MFI Microfinance Institutions MoE Ministry of Electricity MoHC Ministry of Housing and Construction MOLSA Ministry of Labor and Social Affairs MoP Ministry of Planning MoNR Ministry of Natural Resources MSW Municipal Solid Waste NGOs Non-Government Organizations NHA National Health Account NSWMP National Solid Waste Management Plan OECD Organization for Economic Co-operation and Development O&M Operations and Maintenance PCI Pavement Condition Index PDS Public Distribution System PHC Primary Health Care PPAs Power Purchase Agreement RAND Research and Development Corporation REACH Responsive Education for All Children SEINA Socio-Economic Infrastructure Needs Assessment SPSF Social Protection Strategic Framework T&D Transmission and Distribution UAE United Arab Emirates UN United Nations iv UNDP United Nations Development Program UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children’s Fund WDR World Development Report WFP World Food Program WHO World Health Organization v KRG: Economic and Social Impact Assessment of the Syrian Conflict and ISIS Crisis Table of Contents ACKNOWLEDGEMENTS ........................................................................................... IX EXECUTIVE SUMMARY .............................................................................................. 1 INTRODUCTION........................................................................................................... 10 1. MACRO-ECONOMIC AND FISCAL IMPACT OF THE CONFLICT ...... 13 1.1 Pre-Crises Macroeconomic Situation .......................................................... 14 1.2 Crises Impact and Stabilization Assessment .............................................. 21 2. SOCIAL DEVELOPMENT IMPACT OF THE CONFLICT ....................... 33 2.1. Health Sector ................................................................................................ 33 2.2. Education Sector .......................................................................................... 42 2.3. Food Security and Agricultural Livelihoods ............................................. 48 2.4. Poverty and Welfare .................................................................................... 52 2.5. Social Assistance and Labor ....................................................................... 61 2.6. Housing and Shelter ..................................................................................... 67 2.7. Social Cohesion and Citizen Security ......................................................... 71 3. IMPACT OF THE CONFLICT ON INFRASTUCTURE .............................. 76 3.1. Water and Sanitation Sector ....................................................................... 76 3.2. Solid Waste Management ............................................................................ 79 3.3. Electricity Sector .......................................................................................... 84 3.4. Transportation Sector ................................................................................. 87 ANNEXES ....................................................................................................................... 95 REFERENCES .............................................................................................................. 128 vi List of Boxes, Figures, Tables, and Annexes Box 1.1: Accounting for the Impact of the Budget Freeze ............................................................ 27 Figure 1.1: KRI: GDP at Current Prices, 2004-2011 .................................................................... 14 Figure 1.2: KRG: Economic Composition of Public Expenditures, 2013 ..................................... 16 Figure 1.3: Number of Local and Foreign Registered Firms: Erbil, Sulaymaniyah, and Dobuk Governorates ................................................................................................................................. 17 Figure 1.4 KRI: Licensed Investment Projects, November 2006 till September 7, 2014 (project capital in US$ millions) ................................................................................................................. 18 Figure 1.5: KRI: Investment by Sectors, November 2006 till September 7, 2014 ........................ 19 Figure 1.6: Installed Plants in Industry Sector, July 2014 ............................................................. 19 Figure 1.7: Imports from World and Turkey (US$ millions) ........................................................ 20 Figure 1.8: Public Revenues, Baseline vs. Counterfactual (No Budget Shock) Scenarios ........... 23 Figure 1.9: Point Impact of IDPs on Monetary Wellbeing of KRI Residents, 2014 ..................... 24 Figure 1.10: Level of Consumer Price Index, January 2010 to October 2014 .............................. 26 Figure 1.11: Iraq: Trade Flows (including oil) .............................................................................. 27 Figure 1.12: Iraq: Monthly Imports from Neighboring Countries ................................................ 28 Figure 1.13: Iraq: Monthly Exports to Neighboring Countries (Including Oil) ............................ 28 Figure 1.14: Customs Revenues .................................................................................................... 28 Figure 1.15: Tourist Arrivals in KRG, 2012-2014 ........................................................................ 29 Figure 1.16: Diversion of Trade Routes ....................................................................................... 30 Figure 2.1: Per Capita Health Expenditure in KRI ........................................................................ 34 Figure 2.2: KRG Capital Investment ............................................................................................. 35 Figure 2.3: Hospital Beds by Governorate and Public-Private Mix .............................................. 36 Figure 2.4: Recurrent Health Expenditure in KRI ......................................................................... 37 Figure 2.5: Impact on Per Capita Expenditures ............................................................................. 38 Figure 2.6: Impact of Budgetary Crisis vs. Refugee and IDP Crises on Per Capita Expenditure . 39 Figure 2.7: Foreign Labor Inflow to KRI ...................................................................................... 63 Figure 2.8: Size of the Labor Force by Private-Public Sector ....................................................... 64 Figure 2.9: Labor Force by Sector ................................................................................................. 64 Figure 2.10: Shelter Trends for IDPs in KRI (June 25, 2014 to September 28, 2014) .................. 68 Figure 2.11: CPI Indicators for Rent and General Prices, January 2009 - July 2014 .................... 69 Figure 2.12: Estimated Number of Households Demanding Non-camp Housing in 60/40 Scenario ....................................................................................................................................................... 71 Figure 2.13: Monthly Civilian Deaths by Violence (per million inhabitants) ............................... 73 Figure 3.1: Fiscal Cost of Electricity Delivery in the KRI ............................................................ 87 Table 1: Stabilization Assessment .................................................................................................. 4 Table 1.1: Revenue and Expenditures, 2010-2014 ........................................................................ 16 Table 1.2: Comparison KRI vs Iraq .............................................................................................. 18 Table 2.1: Impact Assessment for the Health Sector: October 2012 – September 2014 ............... 40 Table 2.2: Stabilization Assessment for the Health Sector, 2015.................................................. 41 Table 2.3: Stabilization Assessment by Scenario, 2015 ................................................................ 42 Table 2.4: KRI Education Sector: Basic Statistics on Students, Schools, and Teachers ............... 43 Table 2.5: Dohuk: Refugees Shelters in Schools (as of September 1, 2014)
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