PM Barzani reassures oil companies at reform and private sector initiative

ERBIL, Kurdistan Region — A severe financial crisis that started two years ago has badly hurt the Kurdistan Region, said Prime Minister Nechirvan Barzani on Monday, but it has also presented it with an opportunity for reform and the correction of past mistakes.

Speaking at a conference in Erbil where his government kicked off a three-year reform plan, Barzani said, “The causes that shook Kurdistan Region’s economy and led to a financial crisis were outside our control, but it does not mean that the KRG did not have any flaws in its financial administration.”

To overcome the crisis and reenergize the economy, said the prime minister, “The KRG has and is working on short and long-term structural changes to its financial structure.”

“We have plans to promote other financial sectors such as agriculture, industry, tourism, transportation and communications to replace oil and gas and we will do whatever it takes to put these plans into practice.” He said, addressing foreign diplomats as well as local and foreign finance officials.

Barzani said that a costly war with the Islamic State (ISIS), federal budget cuts and a burdensome 1.8 million refugees and “their need for security, health and education increased KRG’s financial burden several fold.”

“But what made the situation worse was the decline in oil prices which was more effective and more painful for the Kurdistan Region than all the other causes,” he said.

The prime minister went on to say that the government has taken all measures it could in the last two years such as taking loans and seeking the advise of financial institutions such the World Bank.

But, he added, “Taking loans from local and international financial institutions are only temporary measures to face the current crisis and are by no means long-term solutions,”

The three-year plan makes sure the public sector does not dominate the Kurdistan, according to Barzani, and instead opportunities are made available for the private sector in every field.

“Local and foreign investment would be directed to the sectors of agriculture, tourism and industry and this way lessen the demand on the government for employment,” he announced. “For this the government will do whatever it takes to support the private sector and downsize the public sector.”

As he pledged genuine support for the private sector and investors, Barzani said in the meantime, “I want to reassure all foreign companies, oil companies in particular that the KRG is fully committed to its agreements with them and will honor them as they are,”

Foreign and local finance experts have continuously highlighted the need for a reliable banking system in Kurdistan that is important for a robust economy, a sentiment echoed by Barzani.

“We need to carry out reforms in our financial administrations and most importantly in the banking sector in a way that would bring our banks to international standards,” he said. “Up until now the reliance of the private sector on the banking system here has been very weak.”

Drawing on data from the World Bank, the prime minister said that only three percent of the private sector works with the bank for their projects.

Barzani cautioned that the reforms must not hurt the public and low-income families and must be “balanced and sustainable,” and present them with better opportunities through the private sector.