DEAD SEA, July 18, 2005 - In response to a request from the Government of Iraq, up to $500 million in soft loans will be made available over the next two years to finance development projects in priority sectors, the World Bank announced today at an international donors meeting for Iraq at the Dead Sea in Jordan.
This lending package is the first to be extended by the World Bank to Iraq since 1973, following which its strong economic performance and increase in income per capita enabled it to 'graduate' from the Bank.
"The proposed loans are part and parcel of the lending framework pledged in Madrid at the first international donor conference for Iraq in 2003, says Christiaan Poortman, Vice President for Middle East and North Africa. "We made a commitment to support the development and reconstruction efforts using World Bank resources, if and when the Iraqi authorities request it."
As part of an interim strategy to support Iraq's reconstruction, the World Bank has been administering the Iraq Trust Fund -- one of two trust funds under the International Reconstruction Fund Facility for Iraq -- designed to provide swift, flexible and coordinated donor financing for priority investments and capacity-building in Iraq. To ensure sustainable economic recovery and Iraqi ownership of the reconstruction process, Iraqi institutions fully implement projects financed by the World Bank Iraq Trust Fund.
To date, donors committed nearly $400 million in grants to the World Bank-managed Iraq Trust Fund which financed training for approximately 1000 Iraqi civil servants in integral areas of project management, including procurement, financial management, and safeguards. The Trust Fund also financed the printing of some 70 million textbooks that were delivered to classrooms across the country during the last school year.
Seven additional operations were launched this past year aimed at rebuilding schools, restoring essential infrastructure, supporting emergency health care and providing access to clean water. Equally important, modern and transparent systems for project contracts administration were introduced and are resulting in efficient use of reconstruction financing.
The new $500 million lending package will be used to address Iraq's urgent needs by scaling up activities in sectors where operations financed by the Iraq Trust Fund demonstrate progress in implementation and are delivering results.
"We are drawing on lessons from our ongoing trust fund operations to accelerate implementation so that the Iraqi people can feel the difference in their day-to-day lives -- whether it is through improved school facilities, cleaner and reliable supply of water or better healthcare," says Poortman.
A founding member of the World Bank, Iraq received six loans between 1950 and 1973 for agriculture, education, flood control, transport and telecommunications. The last loan closed in 1979. The new lending package will be provided by the International Development Agency, an arm of the World Bank that provides financing on concessional terms to low-income countries.
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