World Bank Iraq Trust Fund Update on Progress IRFFI Donor Committee Meeting Naples, Italy, February 18, 2009

The World Bank in Iraq How Can the Bank Make a Lasting Impact? The Banks main objective is to help Iraq use its public resources more effectively and transparently, and support Iraqs efforts to: Build efficient and accountable institutionsBuild efficient and accountable institutions Improve delivery of basic servicesImprove delivery of basic services Lay groundwork to strengthen the private sector and medium-term economic developmentLay groundwork to strengthen the private sector and medium-term economic development

World Bank Iraq Trust Fund World Bank finances projects designed to improve Iraqs delivery of basic services, while strengthening Iraqi institutions and building systems to help Iraq manage public resources, create jobs, and improve governance.

The World Bank in Iraq World Bank Emphasizes Iraqi Ownership Identification & Preparation Iraq designs projects, with Bank assistance Iraqi Strategic Review Board reviews projects to ensure consistency with Iraqs development priorities Bank appraises project Bank and Iraq jointly negotiate legal agreementsImplementation Iraq implements projects Iraq contracts private companies to carry out the work, using World Bank competitive procurement procedures and financial management policies Bank supervises the implementation of projects Fiduciary monitoring agent helps Bank monitor physical progress and compliance with policies

The World Bank in Iraq World Bank Iraq Trust Fund Portfolio 18 projects totaling US$482 m Bank executes 3 projects (US$13 m) at request of GoI GoI executes 15 grants (US$469 m) 78% of GOI-executed grants has been contracted or disbursed (US$364 m) 45% of grant financing has been disbursed for project expenditures (US$212m)

Iraq Trust Fund Projects at a Glance World Bank Iraq Trust Fund

Sources and Uses of Funds World Bank Iraq Trust Fund Donors have deposited US$494.4 million Investment income totals US$74.3 million Total value of ITF almost US$568.7 million ITF finances 18 grants valued at US$481.6 million, obligating 97% of donor deposits

Disbursement Status World Bank Iraq Trust Fund Total disbursements stand at US$241.3 million. Project expenditures total US$221.9 million (46% of the value of grants) Expenditures to cover costs of project appraisal and supervision total US$16.4 million Expenditures for trust fund management and administrative fees total US$3.0 million

Resource Availability World Bank Iraq Trust Fund

ITF Project Implementation World Bank Iraq Trust Fund Iraq implements projects and the Bank supervises implementation Iraq contracts private companies to carry out the project, according to Bank procurement and financial management procedures The Bank employs local staff and consultants to train and advise executing agency before and during project implementation ITF engages a fiduciary monitoring agent (FMA) to monitor physical implementation and compliance with procurement and financial management procedures

Oversight and Controls World Bank Iraq Trust Fund Annual project audit Annual external audit of trust fund Annual trust fund single audit, representation letter Quarterly unaudited financial statements Periodic internal audits of the country program Special measures introduced when the Bank initiated work in Iraq to mitigate fiduciary risks (e.g. use of FMA)

The World Bank in Iraq Implementation Issues Obstacles Institutional capacity and high turnover Financing shortfalls due to currency fluctuations / price escalation Payment delays for Iraqi Dinar payments Action Taken Training and providing on-the- job support Restructuring projects to maximize impact with available resources Provide additional financing for projects having impact Pilot designated (advance) accounts Eliminate commercial banking links

Impact of ITF Projects World Bank Iraq Trust Fund Strengthen project management, fiduciary governance Collect & analyze data to design evidence-based policies Develop sector strategies and investment programs Promote sustainable systems and institutions to deliver services to population Help settle communities through employment opportunities and other services

Results to Date of ITF Projects World Bank Iraq Trust Fund Printed and distributed over 82 million textbooks, exceeding the original objective of distributing 69 million books. Rehabilitated 133 schools. Constructed 46 new schools. Rehabilitated 8 hospital emergency units and trained 60 doctors and 60 nurses. Improved 88,000 hectares of irrigated land, benefiting over 146,000 farmers.

Results to Date of ITF Projects World Bank Iraq Trust Fund Completed the first nationwide household income and expenditure survey since 1998, covering 17,000 households. Results will help Iraq make data-based policy decisions. Conducted 22 workshops for 600 Iraqi officials providing project implementation tools and build professional networks. Carried out more than 60 workshops for over 1,200 Iraqi officials in procurement reform, PFM, audit and judicial reforms, and social safety nets.

Project Pipeline World Bank Iraq Trust Fund Public Finance Management (PFM) Reform Project (US$18m) - help Iraq implement effective, accountable, transparent PFM Banking Reform Project (US$10m) – help CBI implement the financial & operational restructuring of the 2 state- owned banks Pension Reform Project (US$6m) – help MOF/National Board of Pensions implement the pension law, undertake analysis to develop old-age income protection strategies Education Reform Project (US$3m) – help Iraqi education ministries develop a national education strategy for Iraq

World Bank Presence in Iraq World Bank Iraq Trust Fund In Baghdad Office Country manager and senior public sector specialist Recruiting, with help from DFID, a senior private sector specialist Hiring an Operations Officer Outside Baghdad Office 28 Iraqi staff/consultants provide daily support for project implementation nationwide May hire national staff in Basra to support implementation of PFM project