The World Bank Group mobilizes financial and technical assistance in support of the Government of Iraq’s efforts to regain the trust of its citizens by stabilizing its economy, improving governance, and supporting the rebuilding of livelihoods. The World Bank works closely with partners in the international community to support economic reforms that strengthen the long-term economy. It last released a Country Economic Memorandum on September 30, 2020. This analyzes the constraints and drivers of growth and recommends policies for more diverse and inclusive economic models.
On August 3, 2021, the World Bank Board approved its new Country Partnership Framework (CPF) with Iraq for the fiscal years 2022–2026. The framework lays out the main development goals it will support in Iraq and proposes a series of strategic interventions to help the country respond to the pandemic, reform the economy, and rebuild its human capital. It is organized under two pillars: (i) improved governance and public service delivery, and private sector participation; and (ii) strengthened human capital, into which corporate priorities such as citizen engagement, gender equality, and climate change are mainstreamed. The framework of the CPF will be implemented in two phases to allow the flexibility to adapt to changes over the five-year period.
The Bank launched the Iraq Human Development Public Expenditure Review Report (HD-PER) on May 31 for broad dissemination. The HD-PER offers evidence-based policy recommendations to inform urgently needed reforms to spur human capital development in the sectors of health, education, and the pension system.
The following have been the main areas of the World Bank’s engagement in Iraq since 2015:
In December 2015, the World Bank approved a US$1.2 billion Development Policy Financing loan (DPF) and, in December 2016, another US$1.44 billion DPF loan to help Iraq weather its fiscal crisis and move ahead with reforms in three areas: the management of public finances; a more stable and sustainable energy supply; and more efficient, transparent state-owned enterprises.
Modernization of Public Financial Management Systems (PFM)
Financed with an International Bank of Reconstruction and Development (IBRD) loan of US$41.5 million and implemented by the federal Ministry of Finance and Ministry of Planning and the Kurdistan Regional Government’s Ministry of Planning, this project aims to improve transparency and the management of financial information, and to modernize public procurement at selected federal and governorate agencies.
A Multi-Donor Trust Fund:
The Iraq Reform, Recovery and Reconstruction Fund (I3RF) was founded in partnership with the Government of Iraq in 2018, and is funded by Germany, the United Kingdom, Canada, and Sweden. The I3RF provides a platform for financing and strategic dialogue for reconstruction and development, with a focus on targeted national reforms and public and private investments in sectors involving socio-economic recovery and reconstruction. It also aspires to support gender equality, peace building, and citizen engagement. The Fund has played a key role in policy dialogue around reforms in Iraq. Its analytical work provided evidence which informed the GOI reform program, also known as the White Paper. Currently, its focus is on operationalizing the White Paper to support the GOI in making concrete advances in various sectors. The analytical work funded by the I3RF contributed to informing discourse and programming on economic diversification, the business environment, poverty and vulnerability, the agri-food sector, and education policy in Iraq. In 2020, the I3RF updated its Work Plan to adapt to new emerging priorities because of the fall in international oil prices and the COVID-19 pandemic. In 2021, the Fund is expected to move ahead with the implementation of recipient-executed projects, based on the analytical work initiated in 2019 in collaboration with the GOI.
The World Bank Emergency Response includes:
Emergency Operations for Development (EODP)
In July 2015, the World Bank approved a US$350 million financial package to Iraq to support the reconstruction of infrastructure and restoration of public services—including health, electricity, water, sanitation, solid waste collection, transport, education, and agriculture—in and around municipal areas newly retaken from the Islamic State. In response to the need for more reconstruction in Mosul and other areas, it approved Additional Financing of US$400 million in 2017.
- On September 24, 2021, the World Bank Board of Directors approved the Iraq COVID-19 Vaccination Project for the amount of US$100 million under the COVID-19 Strategic Preparedness and Response Program (SPRP), including a grant of US$2 million from the Multi-Donor Trust Fund for Iraq Reform, Recovery and Reconstruction Fund (I3RF). The project aims to support the GOI in the acquisition and distribution of COVID-19 vaccines.
- The World Bank used its active program in Iraq to respond to the impact of COVID-19 pandemic through the reallocation and restructuring of the undisbursed portfolio. An amount of US$7.8 million, held under the Emergency Operation for Development project (EODP), was restructured in July 2020 to procure COVID-response medical equipment.
- The urgent EODP project’s restructuring efforts were combined with a COVID-19 Response and Health System Strengthening Technical Assistance program, financed by the I3RF, to strengthen the government’s capacity to respond to the COVID-19 pandemic, and to develop innovative models to improve the financing, access, and quality of healthcare services.
Other World Bank-financed sector projects
A US$355 million project to improve connectivity and safety on selected road sections of Expressway-1, a 1,200 km-long highway serving traffic along Iraq’s east-west and south-north Corridors linking Um Qasr in the south with Jordan and Syria via Baghdad, and the north–south trade corridor in Duhok governorate towards the Ibrahim El-Khalil border crossing with Turkey.
A US$210 million project to improve the quality of drinking water and wastewater services in Baghdad, with the objective of improving utility management and creating an enabling environment. The project aims to strengthen institutions for integrated urban water management and utility management, and to create an enabling environment for private sector management and investment in drinking water supplies and wastewater infrastructure.
The US$300 million Community Driven Development project, launched in 2019 to improve access to basic services and increase short-term employment opportunities in targeted communities, has completed 80% of phase 1 in three governorates, and is in advanced stages of phase 2 in four other governorates.
A subnational project of US$200 million to foster increased private sector participation in the medium term, this works to improve the reliability and operational efficiency of electrical services in Basra Governorate. In doing so, it supports broader objectives of decentralizing services.
A recipient-executed grant to promote the social and economic inclusion of at least 3,000 conflict-affected Iraqi youth (ages 15 to 29) through entrepreneurship and youth-led community development activities.
International Finance Corporation (IFC)
IFC has been engaged in Iraq for more than 15 years, mobilizing Foreign Direct Investment (FDI) and providing advisory services to support the expansion of the Iraqi private sector. Since 2005, cumulative, long-term financing (including by other financiers) has exceeded $1.2 billion for energy, telecoms, manufacturing, agribusiness, logistics, tourism, and banking.
IFC is looking to expand into infrastructure, gas capture, and Renewable Energy. Additionally, IFC will focus on investment opportunities in financial markets, manufacturing, agriculture, and other sectors. On the advisory front, IFC has a wide program that covers capacity building for banks and financial institutions (including Small and Medium Enterprises banking, digital financial services, and risk management), as well as corporate governance and Private Public Partnership engagement.
IFC is also collaborating with the World Bank and working with other development partners through the Prospects Partnership, which supports entrepreneurship, to help Foreign Displaced Persons and Internally Displaced Persons and vulnerable host communities.
Multilateral Investment Guarantee Agency (MIGA)
MIGA’s outstanding gross exposure in Iraq stood at US$8 million as of February 2, 2021. MIGA signed its first contract of guarantee in Iraq in FY2011 for a project that supported a Turkish investment in a water bottling plant in Baghdad. In FY2014, MIGA provided another guarantee for a project in the telecom sector in the Kurdistan autonomous region of Iraq. And, in FY2015, it supported a port logistics project in Umm Qasr. Most recently, in FY2019, MIGA issued guarantees in favor of a Lebanese financial institution with operations in Iraq.
The Bank, IFC, and MIGA are working closely together to identify opportunities to support FDI for Iraq’s reconstruction and recovery, especially in the energy, transport, and financial sectors.
Last Updated: Nov 01, 2021