Iraq gets first funding to rebuild war-struck regions
Baghdad - Iraq and the World Bank signed a $350 million loan agreement to fund emergency reconstruction in towns recaptured from Islamic State (ISIS) militants, a deal Baghdad said marked the first international help to rebuild areas devastated by war.
Iraqi Finance Minister Hoshyar Zebari said approximately one-third of the money would go towards repairing roads and bridges with a similar amount allocated to restoring infrastructure, such as electricity networks, water and sewage.
Iraq faces a budget deficit of up to $20 billion this year as it grapples with low oil revenues and the heavy cost of war with ISIS. Militants control much of northern and western Iraq but have been driven out of parts of Diyala and Salahdin provinces north of Baghdad by Shia militia, Kurdish peshmerga and Iraqi security forces, backed by US-led air strikes.
Extensive damage from those battles left the Iraqi government, whose revenues have been battered by the halving in world oil prices, appealing for international help.
“This is the first direct tangible assistance for the reconstruction and stabilisation efforts by the government to normalise life in the areas liberated from ISIS,” Zebari said at a July 12th signing ceremony in Baghdad.
He said the deal granted Iraq a 15- year loan at about 1% interest, with a 5-year grace period.
Iraq has also received pledges of financial support for a government reconstruction fund from the United States, the European Union, Japan and individual European countries, Zebari said, but the World Bank loan was the first to materialise.Iraqi forces recaptured Tikrit, hometown of former leader Saddam Hussein in late March, the biggest gain by government forces since ISIS fighters swept through northern Iraq in June 2014.
But widespread damage and unexploded ordnance, as well as Sunni residents’ fear of retribution from mainly Shia fighters who retook Tikrit, mean only 4,000 families have returned.
A World Bank loan document said there was a need to restore basic services quickly and show that the “state is re-establishing its presence and credibility”.
Iraq was “possibly going through the worst and most dangerous challenge to its territorial integrity, economic sustainability and human development capacity”, it said.
The World Bank is also preparing a separate $1 billion loan to help Baghdad deal with its budget deficit. Bank officials say the programme, awaiting approval by the bank’s board, aims to improve energy efficiency, reform state-owned enterprises and improve budgetary efficiencies.
“We would like to be as fast with this budget support as we have been with the investment operation,” the bank’s Middle East Director Ferid Belhaj said. “We are looking forward to finalising the process by… September or October.”
A third tranche of assistance of $355 million, aimed at improving roads, including links to the southern port of Umm Qasr, was approved by the World Bank in December 2013 but was only ratified by Iraq’s parliament in March.