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Innovative Approaches to Implementing Fiscal Federalism

The Iraqi government, in partnership with the IOG and governorates is undertaking a series of innovative approaches to implementing fiscal federalism and decentralization.In an attempt to accelerate progress, these innovative projects target specific areas hindering decentralization and bring specialized skills, expertise and approaches to the Iraqi context; thus helping to evolve institutions and their cultures in the process.

Federal/Provincial Master Agreement

The IOG is facilitating a master agreement between the federal government and two provinces that would see these provinces have additional authorities in managing their budgets in a decentralized environment.

New Accountability Regime

The IOG is facilitating the creation of a more streamlined regime to reporting and accountability for decentralized services.The reporting requirements for resource allocations, as well as performance against national standards will be fulsome but yet less cumbersome than existing processes.

Participants in Cohort 3 have also left an important mark on the pilot project.They have offered practical advice on balancing Baghdad's need to uphold national standards with the provinces' need for flexibility in program delivery.This is now reflected in the audit and reporting provisions of the federal-provincial agreement.

While the pilot project has attracted a good deal of interest and enthusiasm among federal and provincial officials, they have also sparked concerns in some quarters over legal and administrative questions.To address these issues and reconcile competing views, the IOG brought together senior federal and provincial officials at workshops in Baghdad and Erbil in August 2017. These discussions were very constructive and led to modifications in the draft federal-provincial agreement. 

Federal Provincial Master Agreements
Long-term stability