US to close Iraq fund
25 April 2008
Iraq: US President Bush's administration has announced it does not intend to seek new funds for the reconstruction of Iraq when it presents its budget to Congress this month (February). The current US$ 18.4 billion allocation is expected to run out in June 2007.
The US Government claims that over 3600 projects will be completed in Iraq by the end of 2006. However, it says security has accounted for up to 25% of the overall costs, and that some funds have been redirected to the construction of 10 new prisons to keep pace with insurgency in Iraq.
According to Commander William McCoy, of the US Army Corps of Engineers, contracts for 80% of the US$ 18.4 billion fund have already been issued and those for the remaining US$ 1.7 billion will be awarded by summer 2006. He also said that Iraq's ability to rebuild itself is now well developed, “Around 60% of reconstruction work was once carried out from design through to completion by international companies, but now nearly 77% are awarded to Iraqi contractors.”
Iraq's interim government is also initiating economic reforms which place it in a better position to fund future investment in infrastructure. Bonds worth US$ 2.8 billion were placed on international debt markets last month under the name of the Republic of Iraq in a move to settle claims with some of the country's largest creditors.
The International Monetary Fund (IMF) also backed a new US$ 685 million loan to Iraq in January which will help the country secure foreign investment, and which clears the way for creditor countries to start debt relief programmes. The Paris Club - a group of 19 wealthy creditor countries - has said that the IMF loan will enable it to implement its -80% reduction in the US$ 38.9 billion debt owed to them by Iraq.