THE WORLD BANK GROUP COUNTRY PARTNERSHIP STRATEGY 2013-2016for the Republic of Iraq

TABLE OF CONTENTS

What is the World Bank Group? The World Bank Group program in Iraq. The World Bank Group’s Country Partnership

Strategy in Iraq. Questions.

THE WORLD BANK GROUP

The World Bank is an international organization whose mission is to reduce poverty and to contribute to sustainable development. It consists of five organizations:

The International Bank for Reconstruction and Development (IBRD): Lends to governments of middle-income and creditworthy low-income countries.

The International Development Association (IDA): Provides interest-free loans—called credits—and grants to governments of the world’s 80 poorest countries.

The International Finance Corporation (IFC): Provides loans, equity and technical assistance to the private sector to stimulate private sector investment in client countries.

The Multilateral Investment Guarantee Association (MIGA): Provides guarantees against losses caused by non-commercial (political) risks to investors in developing countries.

The International Center for Settlement of Investment Disputes (ICSID): Provides international facilities for conciliation and arbitration of investment disputes.

OWNERSHIP OF THE WORLD BANK GROUP

Ownership of the World Bank Group

188 member countries

Board of Governors The Governors delegate specific tasks to the Board of Directors.

Board of Directors The Board of Directors makes decisions on IBRD loans and IDA credits and establishes policies that guide the cooperation of the institution.

President The President responds to the advice of the Board. He is responsible for Bank responsible for Bank management.

Staff 10,000 staff in 130 offices around the world.

VOTING SHARES OF THE 188 MEMBER COUNTRIES

United States16%

Japan 8%

Ger-many 5

%

France 4%

UK 4% China 3%

Saudi Arabia

3%

Russia 3%

Rest of the World

55%

Voting Shares

United StatesJapanGermanyFranceUnited Kingdom ChinaSaudi ArabiaRussiaRest of the world

REPRESENTATION OF IRAQ IN THE WORLD BANK GROUP

Governor: His Excellency Rafe Al-Essawi, Minister of Finance

Executive Director: Merza Hussain Hasan

THE IBRD’S INSTRUMENTS

1. Financing Investment operations focus on the long-term (5

to 10 years) and finance goods, works, and services that support economic and social development projects.

The Government is in charge of developing and implementing these projects with support from the World Bank.

Development policy operations typically run from one to three years, and provide quick-disbursing external financing to support government policy and institutional reforms.

2. Analytical and Advisory Services

THE IFC’S INSTRUMENTS

IFC responds to the demand for finance and expertise from the private sector.

IFC uses a range of financial instruments to provide both long and short term finance (equity, debt, guarantees etc).

IFC brings solutions to its clients through investment and advisory services that help businesses in the developing world meet the challenges of the global marketplace.

IFC aids in directing capital and knowledge to emerging market sectors which require more growth.

To be closer to its clients, IFC has based more than half of its 3,438 employees in country offices.

THE WORLD BANK GROUP PROGRAM IRAQ

Program of on-going investment projects New AAA/Advisory Services since

December 2011 The Country Partnership Strategy of the

World Bank Group

ONGOING INVESTMENT OPERATIONS

Infrastructure:

Baghdad Water Supply & Sanitation

Water Supply, Sanitation & Urban Recon.

Electricity Reconstruction

Community Infrastructure (Supplement)

Social Sectors

School Construction & Rehabilitation

Household Survey & Policies

Emergency Primary Health Care Services

Regional Health Emergency Response

Financial Sector

Banking Sector Reform

Public Financial Management

Private Sector Development

Private Sector Development

Energy

Integrated National Energy Strategy TA

Infrastructure Emergency Road Reconstruction Dokan & Derbandikhan Hydropower Emergency Electricity Reconstruction Emergency Water Supply

Education Third Emergency Education

Iraq Trust Fund Projects IDA Grants

NEW PROGRAMS SINCE DECEMBER 2011

New program of advisory services (Youth Employment, investment climate, Country Economic Memorandum, Public Expenditure Review).

Sought consultations with civil society organizations and non-governmental organizations (NGOs), private enterprises, financial sector, provincial regional councils, local governments, international partners and with Parliamentarians.

CURRENT PORTFOLIO OF ITF AND IDA GRANTS IN IRAQ

Sectoral

Distribution

IFC’S INVESTMENTS

IFC has a total portfolio of around US$378.5 million in 6 projects as of December 2011, the largest in MENA region.

IFC investments include:Financial markets, hotels, ports and

logistics. IFC has a large program of Advisory

activities to complement its investment program. These include capacity building of banking staff, supporting private sector-led development of the housing industry, facilitating SMEs, and providing transaction advice for public-private partnerships (PPPs).

THE WORLD BANK GROUP’S COUNTRY PARTNERSHIP STRATEGY

What is a Country Partnership Strategy (CPS)?

Country Partnership Strategies provide a medium term framework for the Bank's

engagement in a country.

COUNTRY PARTNERSHIP STRATEGY (JULY 1, 2012 – JUNE 30, 2016) Approach:

Foster Consultations and Outreach Adaptability and Responsiveness

Three Main Areas of Engagement Building institutions to improve the management of

financial resources Support economic diversification and sustainable

growth Improve delivery of basic services and social

protection

Two themes will be emphasized in all areas of engagement:

Governance Gender Issues

EXCHANGE VIEWS WITH CITIZENS, PARLIAMENTARIANS & PRIVATE SECTOR Listen to different perspectives to:

Improve the quality of Bank interventionsSet priorities for engagement

The process of consultation will contribute to:Promoting transparencyDesigning operations that safeguard voice

and accountabilityExplain how Bank Group activities benefit

Iraqi citizens

WORLD BANK’S GROUP APPROACH TO SUPPORTING IRAQ UNDER THE CPS

Given Iraq’s own financial resources, the Bank program aims to help Iraq better manage its own public resources and build up effective institutions.

The World Bank Group will focus on bringing knowledge and best practices to help find practical solutions to Iraqi problems.

STRENGTHENING STATE INSTITUTIONS TO IMPROVE MANAGEMENT OF FINANCIAL RESOURCES

Help the Government to strengthen state institutions in the management of public finances by: Putting in place an analytical framework for

informed decision-making on the allocation of budget resources;

Developing a macro-fiscal framework to assist Iraqi policymakers in measuring financial flow from oil; and

Continuing the work of Extractive Industries Transparency Initiative (EITI).

SUPPORT ECONOMIC DIVERSIFICATION AND SUSTAINABLE GROWTH

Improve regulatory environment for private investment and businesses;

Support the strengthening of the financial sector;

Restructure the state-owned enterprise sector

Promote trade and transport facilitation Sound management of natural resources and

environment protection.

STEPS TO IMPROVE DELIVERY OF BASIC SERVICES AND SOCIAL PROTECTION

Restore access to and improve quality of water and sanitation services;

Provide more reliable power and improved infrastructure services;

Improve transport connectivity along key corridors;

Improve delivery of health and education services; and

Strengthen capacity to develop, manage and monitor safety net reforms.

INSTRUMENTS: HOW THE BANK GROUP WILL PROVIDE ITS SUPPORT

Ongoing Portfolio New Lending Analytical and Advisory Assistance, including

sharing other country experience IFC investments and advisory services MIGA guarantees

INSTRUMENTS: HOW THE BANK WILL PROVIDE ITS SUPPORT

Flexible approach to take into account changing circumstances

The Bank will work in areas that meet criteria: Leveraging Iraq’s own resources (also so that

Bank support is integrated into the Government’s priorities and investment program)

Strong government ownership and reform champion

Track record of successful implementation Endorsement of Ministry of Finance

POINTS FOR DISCUSSION

How relevant is the proposed program given Iraq’s development challenges and needs?

Are the proposed areas of engagement appropriate?

Is this the right strategy for Iraq? Does the strategy address the key challenges

–weak institutions, poor delivery of basic services and poor governance?