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 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.
The Bank is finalizing the Iraq Human Development Public Expenditure Review Report, with evidence‐based recommendations for urgently needed reforms to spur human capital development. The report examines three vital sectors: health, education, and the pension system. These will be in line with the reforms laid out in the White Paper and designed to support human capital in Iraq.
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.
- 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, and Canada. It 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 socio-economic recovery and reconstruction. It aspires to support gender equality, peace building and citizen engagement. In 2020, it mobilized support for adaptation to the Trust Fund amid a collapse in international oil prices and the COVID pandemic, updating its work plan to include four new projects to mitigate the impact of COVID. Its analytical work has played a key role in discourse on economic diversification, the Doing Business environment, poverty and vulnerability, the agri-food sector and the revision of the country’s education strategy. As it enters its third year, it will have gender integrated into its operations and be ready to move on with its remaining projects. I3RF is seen as a strategic tool to support the implementation of White Paper reforms.
Modernization of Public Financial Management Systems (PFM)
Financed with an 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, cash, and public investments, and to modernize public procurement at selected federal and governorate agencies.
The World Bank Emergency Response includes:
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, 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.
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 $7.8 million, held under the Emergency Operation for Development project (EODP), was restructured in July 2020 to procure COVID-response medical equipment. This was 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. Upon the request of the Government of Iraq, an amount of US$100 million is also being restructured from the EODP for vaccines and a vaccination plan program.
Other World Bank-financed projects include:
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 at institutional strengthening 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, has successfully completed the first phase in the first three governorates—Salahuddin, Muthanna, and Duhok—and is progressing to a second phase in eight governorates. The project is planning to work with communities in all 18 governorates of Iraq over a 5-year period.
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 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 billion for energy, telecoms, manufacturing, agribusiness, logistics, tourism, and banking.
IFC focuses its efforts on two sectors: reforms for private sector-led growth and economic diversification. The goal is to create a vibrant Iraqi private sector, underpinned by a good investment climate. And: promoting private sector participation in priority sectors to extend capital, mobilize it, and help Iraq diversify its economy away from oil, thus strengthening its resilience. Sectors include energy, infrastructure for utilities, the financial sector and agriculture.
IFC is collaborating with the World Bank and working with other development partners through the Prospects Partnership, which supports entrepreneurship, helping 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: Apr 05, 2021