Rebuilding Iraq to take more than 4 years; World Bank: oil decisive in ensuring funds
The World Bank and the UN have published a joint report which estimates the needs for rebuilding Iraq at 55 billion dollars, closer to the figure put by the USA ranging between 50 to 75 billion for four years.
The report coincided with the announcement of the US treasure department on starting the transportation of the new Iraqi currency printed by a British company in the five coming days.
The US under secretary of treasury for international affairs John Taylor announced that the banking institutions and basic infrastructure utilities in Iraq "are in drastic needs to development and that the economy is in need of a more effective financial renovation." He added that some 2700 tons of the new currency will be shipped to Baghdad on the board of 27 planes and those to be transported by trucks to 250 distribution centers in various parts of the country in order to replace Saddam's dinar and the Swiss dinar already circulated in Iraq.
The World Bank detailed the need of rebuilding 14 sectors that occupy the priority in the process of rebuilding Iraq especially security, banks, the infrastructure of telecommunications, and electricity.
The report expected that its statements depends on the situation inside Iraq in remark to the security and political condition as the estimates were made before the escalation of attacks against the occupation forces and were completed just a short time of a deteriorated security condition. For that reason, the report expected the needed time to execute the projects is longer than the period estimated at four years.
The report said that "Iraq's economy has been negatively affected during 20 years and this resulted in the deterioration of the infrastructure and the environment and social services like health and education which used to be among the best in the Middle East." The report said that the average income per capita in Iraq was 3600 by the beginning of the 1980s and decreased to $770 - $1020 in the year 2001 and witnessed a new decrease in the two followed years to about $500.
The report underlined the decisive role played by oil in Iraq's economy, noting that Iraq's production of oil might reach 2.7 million barrels daily by the end of 2004 when revenues of oil exports will be between 11 to 12 billion dollars annually which will cover part of the needed money for the rebuilding of Iraq. The report recommended to keep taxation low in order to reactivate the economy.
The report underlined the importance of supporting "an economic and social transitional period that ensures social growth and protection, simultaneously." The report estimated the financial needs for education and health and creating more job opportunities at 7 billion dollars between 2004-2007, while the amount of money needed to renovate the infrastructure ( transport, communications, electricity, waters and waste disposal) estimated at 24 billion. The report added that reforms at the agricultural sector need 3 billion in investment while the promotion of the private sector needs 777 million, and 234 million for land mine dismantling.
On the other hand, an American official announced that rebuilding the Iraqi army and oil exports needs 19 billion, while estimating the need of the infrastructure with all its sectors at 36 billion.
This report, however, will be discussed during the donor country conference in Madrid on October 23 and 24. Regarding the accuracy of the data and that the report's estimates are conservative numbers, the report said "The Assessment is based on the best possible data available at the time. However, overall security and travel constraints, the tragic events and subsequent repercussions of the bombing of the UN Headquarters in Baghdad, the lack of primary sources and significant time constraints all made systematic data collection extremely difficult. It also interrupted ongoing and planned consultations with Iraqi officials and civil society stakeholders that were considered critical for ensuring Iraqi ownership of the Assessme nt's findings. To adjust partially for this, Bank and UN staff held intensive discussions on the draft Assessment, and in particular the investment and policy priorities contained therein, with Iraqi representatives in Dubai during the week of September 21, 2003. In addition, IMF staff discussed issues related to macroeconomic policies for 2004, and in particular the draft 2004 budget. Discussions were also held separately on some of the sector assessments in Amman, Jordan. Finally, a meeting to present the findings in the draft Assessment was held with the Core Group (European Union, United Arab Emirates, United States, and Japan) on October 2, 2003, in Madrid ... This report is not intended as a final statement on the status and priority development needs in Iraq today. The individual sector needs assessments, which contain more detailed analysis, are important to supplement the synthesized report. Further assessments will be required over the coming months to fill remaining gaps and improve overall data quality. Finally, there are significant priority sector needs that fall outside the scope of this Assessment. Most central among these are the security and oil sectors, which are being addressed separately by the Coalition Provisional Authority (CPA)."