IE 11 is not supported. For an optimal experience visit our site on another browser.

World Bank: Iraq needs $55 billion

A study by the World Bank and other international organizations estimates that Iraq could handle only $5.2 billion in foreign reconstruction aid next year without problems arising.
/ Source: The Associated Press

A study by the World Bank and other international organizations estimates that Iraq could handle only $5.2 billion in foreign reconstruction aid next year without problems arising.

That financial reality, though, should not discourage countries from making larger contributions that the country needs on both a short-term and long-term basis until its oil industry recovers, the report said.

Prepared jointly by the World Bank with the United Nations and the International Monetary Fund, it estimates that Iraq needs $55 billion in economic aid overall, in the next several years, to finance its reconstruction until the oil industry gets on its feet.

In two weeks these groups and some 70 nations, including the United States, will gather in Madrid for a donor’s conference sponsored by the Spanish government.

A U.S. official on Friday dismissed reports that the conference set for Oct. 23-24 might be delayed amid faltering U.S. efforts to secure U.N. Security Council approval of a resolution designed to attract more peacekeeping troops as well as financial aid.

This official said the conference “absolutely” will be held as scheduled.

There have been reports that Japan has offered $3 billion or $1 billion and that the United State was pressuring the European Union to expand its initial pledge of $230 million.

The $55 billion estimate coincides roughly with the Bush administration’s conclusion that Iraq would need $50 billion to $75 billion to recover from the rule of ousted President Saddam Hussein and war damage. Congress is in the midst of acting on a request for $20.3 billion in reconstruction spending, including $5 billion for Iraq’s emerging security force.

Only American companies are eligible for contracts financed by U.S. contributions, but foreign companies may obtain contracts under non-U.S. international assistance, said the official, who spoke on condition of anonymity. For instance, a British firm is being engaged to print new currency for Iraq, this time without Saddam’s picture.

Treasury Undersecretary John B. Taylor said Friday that the new Iraqi currency, which will be put into circulation beginning next Wednesday, involved the printing of 2,300 tons of new bills at printing facilities around the world. He said the currency was flown into Iraq on Boeing 747s and delivered by convoy to 250 distribution points, mainly banks, around the country.

Taylor said a Treasury team working in the country over the last several months had made major progress getting Iraq’s banking system back in operation.

The country’s two biggest banks, Rafidain and Rasheed, now have more than 280 branches open, almost back to the level of operations before the U.S.-led invasion, Taylor told a banking conference in Washington.

“Due to careful planning, individual Iraqis now have access to their deposits and there were no bank runs,” he said. “These banks will play important roles in the currency exchange and they have already been instrumental in facilitating the payment of civil servants and pensioners.”

The Bush administration’s proposed U.N. resolution is designed to gain international financial and military support by giving the United Nations a larger role in Iraqi reconstruction. But widespread demands for a rapid end to the U.S. military occupation, and the turning over of control to Iraqi civilians, have posed hurdles to Security Council approval.

The official said assistance for Iraq will be raised in various ways whatever the outcome.