VZCZCXRO9378
RR RUEHBC RUEHDA RUEHDE RUEHDH RUEHIHL RUEHKUK
DE RUEHGB #3129/01 3361309
ZNR UUUUU ZZH
R 021309Z DEC 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 5610
INFO RUCNRAQ/IRAQ COLLECTIVE
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 BAGHDAD 003129 
 
***CORRECTED COPY*** 
CHANGES MADE TO SUBJECT LINE, PAR 1, PAR 3 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/I/ECON 
 
E.O.12958: N/A 
TAGS: ECON EFIN EAID PGOV PREL IZ
SUBJECT: IRAQ'S POVERTY REDUCTION STRATEGY - CUT POVERTY BY 30 PERCENT 
BY 2014 
 
BAGHDAD 00003129  001.2 OF 003 
 
 
Sensitive but unclassified.  Please protect accordingly. 
 
¶1. (U) Summary:  On November 24, the Council of Ministers (CoM) 
endorsed Iraq's first Poverty Reduction Strategy (PRS), a 
requirement for the release of any potential World Bank Development 
Policy Loan.  The PRS aims to reduce by 30 percent the number of 
Iraqis living below the country's poverty line by 2014.  Iraq's 
current poverty rate is 23 percent.  The 2010 proposed budget takes 
the first step toward this goal by putting more emphasis on health, 
education, and environmental issues.  The GOI recognizes that its 
human and budget resources in the near term will not be sufficient to 
undertake all activities envisaged in the PRS, so the GOI intends to 
seek donor support.  End Summary. 
 
DRAFTING THE POVERTY REDUCTION STRATEGY (PRS) 
 
¶2. (U) The PRS was drafted by a PRS High Committee with the 
assistance of consultants paid for by the World Bank and the United 
Nations.  The PRS High Committee is composed of representatives 
(mostly at the Director General level) from the Ministries of 
Finance, Planning, Education, Health, Labor and Social Affairs, and 
Women's Affairs - together with the KRG Ministries of Planning and 
Labor and Social Affairs.  The Committee is chaired by Dr. Mehdi 
Al-Alak, Deputy Minister of Planning and Development Cooperation and 
Chairman of the Central Organization for Statistics and Information 
Technology (COSIT).  COSIT published the 2007 Household 
Socio-economic Survey, another World Bank project, as well as the 
"Status of Human Development in Iraq" and "Iraq Poverty Assessment" 
reports. 
 
 
PRS OBJECTIVE: HALVE POVERTY BY 2014 
 
¶3. (SBU) The five-year PRS seeks to reduce poverty and raise the 
level of human development in Iraq, specifically reducing the rate 
of poverty by 30 percent (to around 16 percent) by 2014.  According to 
the Iraq Socio-Economic Survey conducted in 2007, 6.9 million Iraqis 
(22.9 percent of the population) have incomes below the country's 
poverty line of approximately USD 65/month.   [NOTE:  The poverty 
line is calculated as follows: 2332 calories/day are considered 
sufficient for an individual to live.  Data from the 2007 Household 
Socio-economic Survey indicates that the cost of one calorie is 
0.482 Iraqi dinars (IQD).  Thus, the minimum monthly sum to be spent 
on food for a person to survive is 34,250 IQD.  Basic non-food costs 
are estimated to be 42,646 IQD per month.  Taking the food and 
non-food costs together yields a poverty line at an income of IQD 
76,896 per person per month (about USD 65).  END NOTE.]  [COMMENT: 
This data does not account for food price inflation, which we 
estimate to be 20 percent since the survey was taken, and therefore 
may underestimate the real cost for food by approximately 18 
percent.  END COMMENT.] 
 
¶4. (U) According to the PRS, half of the poor reside in rural areas, 
with Muthanna, Babel and Salah Ad Din provinces having the largest 
share of their populations under the poverty line.  Urban areas, 
home to 70 percent of Iraq's population, have significant shares of 
population under the poverty level.  Thirteen percent of the poor 
live in Baghdad and 10 percent in Basra.  The disparity between the 
rich and the poor, as measured by the Gini index, is relatively low 
in Iraq (30.9 compared to 34.4 in Egypt, 35.3 in Algeria, and 38.8 
in Jordan).  The poverty gap, that is the gap between average 
incomes of the poor and the poverty line, is rather small at 4.5 
Qincomes of the poor and the poverty line, is rather small at 4.5 
percent.  Thus, a modest improvement in overall incomes could lift 
many above the poverty line. 
 
PRS APPROACH 
 
 
¶5. (U) The PRS recognizes two approaches for people to emerge from 
poverty:  increasing their incomes, and reducing their expenditures 
to meet their basic needs (e.g., health, education, housing, and 
transportation).  The PRS accepts a market-oriented approach to job 
creation rather than relying on a large government presence in 
economic activity.  The PRS also seeks higher incomes thorough 
increasing productivity; providing skills training to meet job 
demand; reducing the illiteracy rate by at least 30 percent; 
increasing access to primary health care; targeting social 
protection to the truly needy; increasing housing and infrastructure 
for the poor;, and strengthening the role of poor women in the labor 
force. 
 
LINK TO THE NATIONAL DEVELOPMENT PLAN 
 
¶6. (U) The Ministry of Planning and Development Cooperation (MoPDC) 
is mindful of the need for close coordination between the PRS and 
the National Development Plan (NDP), for which the MoPDC also has 
the lead within the GOI.  Dr. Al-Alak, as Chair of the PRS High 
 
BAGHDAD 00003129  002.2 OF 003 
 
 
Committee, also holds a seat in the NDP Committee.  His counterpart, 
MoPDC Deputy Minister for Techncial Affairs Dr. Sami Mati Polous, is 
responsible for the NDP and participates in the PRS High Committee 
as well.  The PRS notes that the NDP objectives of sustainable 
growth, higher incomes, and a fair distribution of benefits flowing 
from economic development also support the objectives of the PRS. 
At the same time, the PRS influences the NDP by targeting poor and 
rural locations, especially in the areas of education and health. 
 
PRS LINK TO DONORS 
 
¶7. (U) Since the Council of Ministers endorsed the PRS on November 
24, the GOI has been considering how to best engage the donor 
community for support.  (A translated version of the strategy will 
be circulated to the donors soon.)  Dr. Al-Alak has noted that the 
proposed 2010 budget reflects some of the GOI thinking behind the 
PRS, e.g., increased emphasis on education, health, and 
infrastructure.  In addition, the GOI would appreciate donor 
assistance, financial support, and expertise in all the areas 
identified by the PRS (see paragraph 9 for a summary).  A World Bank 
expert noted that the Bank will look at the PRS in making any 
decisions on what areas it might support through new assistance 
programs. 
 
MONITORING AND EVALUATION 
 
¶8. (U) An integral feature of the PRS is a section on monitoring and 
evaluation of those outcomes that can be measured.  A High 
Ministerial Committee to Alleviate Poverty, composed of 
representatives from the private sector, civil society, donors, the 
World Bank, ministries and local governments is planned to oversee 
monitoring and evaluation.  This Committee would be supported by an 
Executive Secretariat with technical committees covering each area 
covered by the strategy, e.g., income, health, education, housing, 
women, and social welfare.  The Executive Secretariat also would 
ensure coordination of the PRS with the NDP. 
 
 
SUMMARY OF PRS OUTCOMES TO BE ACHIEVED BY 2014 
 
¶9. (U) The PRS presents specific outcomes to be achieved and lists 
activities to help achieve them.  Below is a list of the outcomes 
with a selection of activities for the five-year period (2009-2014) 
covered by the PRS. 
 
Higher income for the poor 
-------------------------- 
 
- Increase agricultural productivity (infrastructure for marketing; 
training; rethinking legislation and agricultural policies); 
 
- Lending program for income-generating activities (widening lending 
activities; awareness campaigns; training for loan recipients); 
 
- Review the minimum daily wage to make it consistent with changes 
in poverty level (changes to labor laws; education on workers' wage 
rights; inspections for compliance with the law); 
 
- Employment recruitment offices (coordinate creation of employment 
offices with private sector; skills training); 
 
- Civil society initiatives to support the poor (donors, government 
support); and 
 
 
- Expand craft centers and training programs (awareness campaigns; 
civil society to open training centers to the poor). 
 
Improve health conditions for the poor 
-------------------------------------- 
 
- Improve access to primary health care (training of health care 
personnel; building health care centers; mobile clinics); 
 
- Increase awareness of health risks in poor areas (awareness 
campaign); 
 
- Improve delivery of safe drinking water and sanitation to poor 
areas (expand current projects); 
Qareas (expand current projects); 
 
- Enhance coverage of poor areas for immunization (strengthening 
monitoring of disease transmission; immunization campaigns; 
sustaining supplies of vaccines); 
 
- Improve nutrition of the poor (better nutrients in ration system; 
primary schools to participate in nutrition program); and 
- Strengthen family planning (awareness campaigns; training of 
 
BAGHDAD 00003129  003.2 OF 003 
 
 
health officials; provide materials). 
 
Improve education for the poor 
------------------------------ 
 
- Eliminate illiteracy; increase enrollment in all levels of 
education (extend compulsory education to middle school; promote 
culture of compulsory education; awareness campaigns; monitor drop 
outs); 
 
- Establish primary and middle schools in slums (database of poor 
areas; adequate budget funding; support program for local schools); 
 
- Link social safety net to registration of children in schools 
(database; amendments to the law; exchange of information between 
Education Ministry and MOLSA); 
 
- Improve efficiency of education in poor areas (priority for 
educational services and teacher training); 
 
- Reduce numbers of illiterate people (mandatory literacy; literacy 
centers; awareness raising); and 
 
- Link vocational training to job market (improve quality of 
vocational training) 
 
Housing and Environment 
----------------------- 
 
- State enterprises to build housing for the poor (low-cost housing 
construction projects; identify beneficiaries; concessional terms; 
endowments and social security funds to help with financing); 
 
 
- Encourage private sector participation in low-cost housing 
(measures to encourage private sector to build in countryside; build 
necessary infrastructure); and 
 
- Enabling environment for housing (paving roads; public transport; 
waste disposal; sports clubs; awareness on environmental issues; 
maintenance). 
 
Social Protection and Poverty 
---------------------------- 
 
- Proper implementation of the social safety net (decentralization 
in managing social safety net; database on covered families; 
training to implement system; expand services; accelerate smart card 
system; awareness of rights and penalties; targeting the poor; link 
subsidy amounts to inflation); and 
 
- Use poverty level for determining the target group for subsidies 
(annual update of poverty level; restrict ration card to the needy; 
transfer amounts from ration card to social safety net; reform, 
monitor, and control the ration card program) 
 
Women and Poverty 
----------------- 
 
 
- Less disparity between poor women and men (education, literacy; 
jobs; coverage by social safety net); 
 
- Expansion of programs to address decline in school enrollment 
rates for girls (awareness, priority to girls' schools in poor 
areas; monitoring enrollment rates; logistics support 
(transportation), incentives); 
 
- Specialized training for poor women (outreach; cooperation with 
private sector; follow up to evaluate training); and 
 
- Revised labor laws and social security (social security fund for 
workers in informal sector; monitor implementation of social 
security; awareness; advocacy programs). 
 
FORD