Iraq's Electricity Crisis

In view of the power sector's dire financial condition, and the inability of government to absorb the losses caused in large part by its intervention in the setting of tariffs, it is imperative to rationalize the pricing of electricity. The highest policy priority should be to rebalance the structure of tariffs and realign prices with underlying costs, in part to restore revenue adequacy and generate internal funds for capital investment and in part to eliminate poorly targeted and inequitable subsidies that have created an unsustainable fiscal burden.