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Iraq: World Bank Creates Trust Fund for Iraq

by Martin CrutsingerAssociated Press
January 29th, 2004

WASHINGTON --The World Bank on Thursday approved creation of a special fund to funnel reconstruction aid to Iraq. Officials insisted the country's uncertain security situation will not derail efforts to provide emergency assistance.

 

The bank's 24-member executive committee endorsed establishment of the Iraq Trust Fund, which will operate from funds supplied by individual countries.

 

Bank officials could not give an estimate of the amount of money the fund will administer because they said countries have not decided on how much they will pledge. The officials said a donors' conference will be held at the end of February.

 

They said they expected to quickly obtain funds to support four initial projects. These include a $100 million effort to return children to school and $100 million to rebuild public works.

 

``This short-term strategy is based on the realities on the ground and enables us to respond rapidly and flexibly to the Iraqi people's immediate needs in coordination with the Iraqis and the international donor community,'' said Christiaan Poortman, the bank's vice president for the Middle East and North Africa.

 

After the bombing of U.N. headquarters in Baghdad in August, both the bank and its sister lending agency, the International Monetary Fund, pulled out of the country and set up operations in Jordan.

 

Bank officials said Thursday the agency would depend on Iraqis working as contract employees to coordinate the projects until it is judged safe enough for bank employees to return to Iraq.

 

The trust fund is designed to allow the bank to offer aid before a regular bank loan program can be set up. That step that will require an operating and recognized government and resolution of $100 million owed to the bank.

 

The United States has pledged $18.6 billion to Iraq reconstruction assistance, the largest part of $33 million raised at a donor's conference in Spain in October.

 

The World Bank pledged between $3 billion and $5 billion, the IMF $4 billion.

 

Iraq's top finance officials plan to hold discussions with the IMF and World Bank in early February.

 

Treasury Undersecretary John Taylor said Wednesday that he was optimistic that IMF loans would be flowing to Iraq soon after the June 30 date for the transfer of power from the U.S.-led coalition to an Iraqi transitional government.

 

The United States is working to reduce Iraq's massive foreign debt, estimated at about $120 billion, in an effort to give Iraq's economy a better chance to recover.

 





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