81286384-STE-pool for Domestic Resource Mobilisation (DRM) - Lot 1

Iraq continues to represent a crucial element for the stability and balance of power in the region. Since the fall of Saddam Hussein's regime in 2003, Iraq has been undergoing a political, social, and economic transformation marked by numerous setbacks, repeatedly exposing the country's institutional weaknesses. Following the liberation of all Iraqi territory from Da'esh in 2017, the country is undergoing an economic transformation from long-lasting years of socialism to state re-building in a multidimensional fragile context. In the Global Terrorism Index 2020, Iraq is listed as the second most affected country globally. The overall security situation remains unstable, needs for reconstruction and post-war provision of public services remain partly unmet. State effectiveness is severely limited due to religious divide and profoundly entrenched patronage networks. Iraq ranks 160 out of 180 countries in Transparency International's 2020 Corruption Perception Index. Iraq has significant economic potential that can only be unleashed by empowering the private sector, strengthening state institutions, and restoring legal security. The economy is governed mainly by state-owned enterprises, and a small number of state-owned banks dominates the financial sector. The dominance of state actors suppresses private sector dynamism and weakens the country's economic recovery. Iraq"s economic transformation process has a long way to go; under the Bertelsmann Transformation Index, it ranks 108 out of 136 countries worldwide. The government"s White Papers I and II (2020/2021) attributes the imbalance of the economic structure to the amount of the accumulated public and economic policies since the 1970s - and thus recognises enormous challenges to the transformation of politics and the economy, all of this in addition to the consequences of the war and the Covid19 pandemic. Oil revenues give Iraq more financial leeway to implement the necessary transformation processes than available to most countries. However, the challenges are equally large, and the global transition to a climate-neutral energy supply is expected to lead to a decline in oil demand. Thus, the pressure to transform the economy successfully is high. To address these challenges, GIZ is implementing the project "Strengthening Public Finances and the Financial Markets in Iraq", funded by the German Ministry for Economic Cooperation and Support" and co-funded by the European Union as part of the EU Special Measure "Support to Governance and Sustainable Job Creation in Iraq", for a runtime of three years until 12/24. The overall objective of the project is to strengthen financial and fiscal governance systems that enhance macro-fiscal stability and economic development. While supporting the government"s reform agenda, the project will focus on increasing macro-fiscal stability and economic development by contributing to improving public financial management and accountability, non-oil public revenues, the AML/CFT system and financial sector stability. The project has the following outputs: - Output 1 aims to strengthen the capacity of the tax administration and customs authority, which are responsible for domestic revenue mobilisation, to increase non-oil own revenue. - Output 2 aims to strengthen the capacity of public financial management and accountability institutions in Iraq. - Output 3 aims to improve the capacity of national actors in the Iraqi AML/CFT/CPF system to implement international standards. - Output 4 aims to strengthen the capacity of relevant actors for financing private sector activities.