Iraq - Grain Storage Project

CIRCULATING COPY TO BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRIUCTION AND DEVELOPMENT Not For Public Use FILE COPY Report No. P-1209a-IRQ REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF IRAQ FOR A GRAIN STORAGE PROJECT May 23, 1973 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.   INTERNATIONAL BANL FOR RECONSTIUCTION AND DEVELOPMENT REPORT AND RECONMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF IRAQ FOR A GRAIN STORAGE PROJECT 1. I submit the following report and reconmmendation on a proposed loan to the Republic of Iraq for the equivalent of US$400. million to finance the foreign exchange cost of a grain storage project designed to improve Iraq's grain storage and handling capacity. The loan would have a tenm of 25 years, including 6-3/4 years of grace, with interest at 7-1/4 percent per annum. PAfiT I - THE ECONIOMY 2. The last economic report on Iraq was distributed to the Executive Directors on August 26, 1971 (EJA-35a). An updating mission went to Iraq in April 1972. It is expected that a full economic mission will be mounted in the fall of this year. 3. The 1958 revolution established a republican form of government in Iraq and initiated a decade of fundamental social and political change. The landowner and entrepreneurial classes steadily lost their political and economic influence as successive governments introduced comprehensive land reforms and gradually assumed control of the larger commercial and industrial enterprises. This gradual but fundamental transition to a socialistic economic system, accompanied by frequent changes of government, resulted in a lower rate of growth than Iraq's economic potential would have permitted. The present military Ba'athist government, in power since 1968, has consolidated its position and is giving increased attention to domestic economic and social reforms. 4. Iraq's GNP rose by about 5-1/2 percent annually in the late 196Ots, below the level achieved in the early 1960's, mainly because of slow growth in the oil and agricultural sectors and a depressed level of invest- ment activity both in the public and private sectors. Between 1966-70, oil prodaction increased by only 11 percent (i.e., by less than 3 percent annually), while over the first Five-Year Plan period (1965/66-1969/70), agricultural output rose at an average rate of only about 2.5 percent annually -- below the rate of population growth. Industrial output (excluding oil) rose more rapidly in the late 1960's but the share of this sector remained at only  about 10 percent of GDP, and only 60 percent of the ID 175 million allocated to industry was actually 3pent in the first plan period. Total investment in Iraq grew by about 5 percent annually between 1965-70. By 1970 investment was equivalent to about 18 percent of GNP compared with gross national savings equivalent to about 21 percent. 5. The public sector's relative importance in the economy has risen considerably in recent years as central government expenditures reached about 40 percent of GDP by fiscal year 1970/71. Public oonsumption accounted for over a third of total consumption, while government investment (not including public enterprises) accounted for well over 50% of total investment. In the fiscal years 1966/67-1970/71, total government revenues increased at an average annual rate of 15 percent (in current prices), while current expenditures rose by about 13 percent and capital expenditures by about 9 percent annually. The overall budgetary deficit declined somewhat as a share of GDP, falling to about 5 percent in 1970/71. 6. The performance of the Iraqi economy improved considerably in calendar year 1971 due mainly to a large rise in oil income. This led to a substantial rise in both investment and current expenditures by the government and stronger fiscal and balance of payments positions. At the same time there were encouraging indications that progress was being made in overcoming administrative and other problems which had been constraining Iraq's development program. However the situation changed sharply in 1972 with the fall in oil prodaction in the northern fields and the consequent nationalization of the Iraq Petroleum Company (IPC). 7. The Iraqi econony is dependent on oil which, in 1971, provided close to one-third of national output, nearly 40 percent of exports and more than half of government revenues. Durirg the 1960's the growth of crude oil production averaged only about 5 percent per year, compared to over 10 percent for all Middle Eastern producers. This was due to low and declining levels of investment by IPG, resulting from a protracted dispute with the government going back to 1961, when IPC's concessions in all non-producing areas of Iraq, including the proven North Rumeila oilfield, were withdrawn. A large part of IPC's former concession area was later awarded to the government-owned Iraq National Oil Company (INOC), established in 1964. In recent years, INOC has been developing new fields in North Rumeila with cooperation from East European countries and foreign firms on a contractual rather than concessionary basis. 8. Throughout the past decade the government and IPC have inter- mittently reached agreement on a number of issues concerning mainly the company's payments for current production. A major boost in these payments resulted from an agreement signed in October 1970 which provided for increased production from IPC's southern field and the 1971 Tehran and Tripoli agreements which yielded substantially higher international  -3 - oil prices. Early in 1972, IPC curtailed production from a daily average of about 1,900,000 barrels in January to about 1,400,000 barrels in March and April. After inconclusive discussions Iraq nationalized IPC's assets on June 1, 1972. Mediation under the auspices of the Organization of Petroleum Exporting Countries led to a settlement on March 1, 1973 which provided for the reciprocal payment of US$340 million by the IPC group to Iraq and the delivery by Iraq to IPC of 15 million tons of oil (valued at about $300 million at current prices). In addition IPC transferred to Iraq the assets of the Mosal Petroleum Company and undertook to raise the annual production of the Basrah Petroleum Company to 80 million tons by 1976. 9. Although precise figures are not available, it is estimated that total oil production fell from nearly 8L million tons in 1971 to an estimated 67 million tons in calendar 1972. Although sales (14 million tons) from the nationalized oilfields in the second half of 1972 were at concessionary prices and on barter or semi-barter terms, the other oil (53 million tons) was sold at very favorable prices so that oil revenues as a whole may have fallen only slightly from around ID 297 million in 1971 to around ID 280 million (US$850 million). Overall, the fiscal situation is less tight than had been anticipated, at least in the short run. Past oil revenues have made possible an accumulation of gross reserves, which at the end of March 1973 stood at about $1.0 billion, equivalent to sixteen months imports at the 1971 level. Iraq has made intensive efforts to open up new markets for the nationalized oil. There are good prospects for the early achievement of a record level of oil revenues with the reopening of traditional markets following the March settlement and the agreement reached with Syria in January 1973 and Lebanon in March 1973 on the transit of Iraqi oil. 10. The agricultural sector discussed in Part III of this report is next to oil in its importance to Iraq's economy. It accountsfor about 21 percent of GDP, employs 55 percent of the labor force and provides the greater part of the country's non-oil exports. 11. Iraq has a amall and unsophisticated manufacturing sector, which contributes around 10 percent to GDP and employs less than 5 percent of the total labor force. The major industries are foodstuffs, beverages, textiles, clothing, petroleum refining and building materials. Most of them rely on imported materials, produce only for the domestic market and receive protection through tariffs and import quotas. One impediment to the growth of this sector is the shortage of trained manpower. Petroleum-based and other chemical industries have considerable potential for further development.  - 4 - 12. The transport system consists of river transport on the Tigris and alphrates, about 2,300 km of railways whose efficiency is reduced by the two-gauge system and a heavy backlog of replacement needs and about 10,000 Im of roads, of which less than half are paved for all- weather use. Traffic demands on the rail and road systems are increasing. Investment is required to increase the capacity of the present network and extend it into the more remote parts of the country. A road transport study being prepared under the 1966 road project is expected to identify priorities for road construction. Meanwhile, the government plans to complete the system of main trunk roads linking the major economic centers of north and south Iraq. 13. Although Iraq is an oil-producing country, its per capita GNP, around $320 in 1970, is relatively low. Income disparities between rural and urban areas, as well as between regions, are substantial. In recent years population growth (over 3 percent a year) and urban migration have resulted in high unemployment particularly in urban areas where employment opportunities have not kept pace with production growth. Social services and education facilities are not well developed and substantial infra- structural investment in agriculture and the rural sector is needed. The government is faced with the task of diversifying the economy and creating additional income and employment at a time when the available managerial and technical manpower limits the country's capacity to prepare and implement development projects. 14. In the last few years Iraq's reliance on external financing for public investment has been modest. The total amount of external public debt stood at approximately $454 million at the end of 1972, mostly in the form of long-term loans at relatively low interest. Of this, 26 percent was owed to the USSR and another 25 percent to Kuwait. The debt service ratio is low (2 percent in 1971) and especially with the prospects for increased oil revenues, there can be no doabt of Iraq's ability to undertake additional external borrowing. 15. The trend towards increasing reliance on bilateral assistance from East European countries was accentuated by the IPC nationalization. In September 1972, for instance, the USSR agreed to let Iraq repay all utilized credits (amounting so far only to a small proportion of the $394 million offered) in crude oil during the period June 1972 to December 31, 1980. In the same month the German Democratic Republic agreed to increase its offtake of crude oil from 300,000 tons in 1972/73 to 600,000 tons by 1974/75, within the framework of a US$84 million loan made in 1969.  - 5 - Similar agreements were reached with other East European countries and with "third bloc" countries such as Brazil and India. Other loan agree- ments concluded since June 1972, include a $130 million short-term credit from the Organization of Arab Petroleum Exporting Countries; a short-term loan of $15 million, a medium-term loan of $29 million and a long-term loan of $78 million from France (the last two in the form of export credits). Most of this bilateral and short-term financing has been and is expected to continue to be for oil and industrial investments. There is little or no prospect for foreign private capital, except suppliers' credits. Long-term finance for agricultural development, the development of human resources and basic infrastructure such as transport, has not been available from bilateral sources or through suppliers' credits, and thus is likely to be sought fro., sources such as the Bank. PART II - BANK GROUP OPERATIONS IN IRAQ 16.. The Bank has made loans totalling $105.-7.million to Iraq over a period of 23 years. The first four loans were for flood control (1950), roads (1966), telecommunications (1971) and education (1972). -The fifth loan of $hQ milliw. for the Lower Khalis Irrigation project was signed in late January 1973, and is ezpected tz be declared eEective shrtly. Annex II contains a summary statement of Bank loans as of April 30, 1973 and notes on the execution of ongoing projects. There have been no IFC investments in Iraq and none are being considered at this time. 17. After the first loan in 1950, Iraq did not seek further assist- ance from the Bank for a long time, partly because foreign exchange require- ments for public investment were met from oil revenues. An increase in public investment in the mid-1960's led to a brief revival of interest in Bank lending which resulted in the roads project. Over the past five years the government has expressed further interest in Bank assistance in key sectors. The telecommunications loan was the first project to result from this renewed interest. 18.. While it is expected that Iraq will continue to earn substantial oil revenues, most parts of the country are at an early stage of development and the per capita income is relatively low for an oil-producing country. Substantial resources are required to build up adequate public services and create additional sources of income and employment and to diversify the econony. Progress under the current Development Plan has been cons- trained by limited capacity in project identification, preparation and manage- ment. Conscious of these shortcomings, Iraq recognizes the need to make greater use of organizations like the Bank for training and technical assist- ance. In the last two years, it has taken full advantage of courses offered by the Economic Development Institute which has also agreed to spon- sor an agriculture course in Baghdad later this year. Iraq is also making greater use than in the past of foreign consultants and contractors for its development projects.  - 6 - 19. Iraq is creditworthy and Bank lending is justified not only because of Irao's low per capita income but also because it can serve as an instrument for providing technical assistance in project preparation and implementation. In recent discussions Iraqi officials have indicated their continuing interest in project lending over the next four to five years; for the more distant future the Iraqi authorities have requested technical assistance for projects which they would themselves finance. A program for future cooperation with the Bank is being discussed in Iraq and will be followed by discussions with the Bank later this year. Mean- while work is proceeding on projects already in the pipeline. 20. The prospective lending program gives particular attention to agriculture, education, transport and communications. The education project and Lower Khalis Irrigation project were prepared with assistance fz m the Bank's Cooperative Programs with UNESCO and FAO. The proposed grain storage project was prepared by Iraqi consultants in collaboration with a U.K. firm and in consultation with Bank staff. The Bank is also helping with the preparation of a second roads project, which may be ready for Board considera- tion by late FY74, followed in FY75 by an irrigation project in Northern Iraq. Other projects in the agricultural sector have been identified and preparatory work on them should begin in the near future. The Bank has provided technical assistance with the preparation of terms of reference for a comprehensive study of Iraq's land and water resources whtich should provide a basis for assessing the priorities to be accorded to proposals to extend irrigation and drainage and bring new lands under cultivation. It is expected that the Bank will be involved in the implementation of the study. PART III - THE AGRICULTURAL SECTOR General Setting 21. About 28 percent or 12 million hectares of the total land area in Iraq is potentially suitable for cultivation of which at present only 8.5 million is cropped. In any one year, only about 50 percent of the cultivable area is cultivated because under the present system an area remains fallow in alternate years. Most of the cropped area is given over to wheat and barley in the winter, while rice, cotton and vegetables are grown on a small scale in the summer. Dates grown in the southern part of the Tigris-Euphrates basin are an important export crop. 22. Annual precipitation in the mountains and foothills of the northern provinces occurs mostly in the winter season and averages about 1000 mm per year. The potential cultivable area in this "dryland zone", where rainfed cultivation is practiced, is about 3 million hectares. Despite the low rainfall and difficult topography of the mountains in the northeast, about 300,000 ha. are devoted to wheat and barley production.  - 7 - Over the next decade, an additional 100,000 hectares are expected to come under wheat production, now that peace has been restored with the Kurds. The piedmont zone to the east of the river Tigris is a rainfed area support- ing a substantial livestock population. Annual rainfall over the remaining three-quarters of Iraq averages less than 100 mm. Outside of the "dryland zone", the potentially cultivable area is about 8 million hectares provided irrigation water is made available. 4.5 million hectares are presently irrigated from the Tigris and Euphrates rivers, south of the rainfed zone. 23. Despite its share of GDP, the agricultural sector is under- developed and its productivity is amongst the lowest in the world. The major constraints on agricultural development include reliance on the vagaries of rainfall and insufficient water distribution and control facilities, complicated by exc6ssive soil salinity and poor drainage. Soil salinity is so severe in some areas that until the soils are leached and proper drainage provided, the effect of modern farming inputs would be negated. These constraints are aggravated by the traditional reluctance of farmers to use modern agricultural techniques, insufficient credit facilities and extension services, and inadequate investment planning and implementation. 24. The government is aware of these problems and has accorded high priority to agriculture in the current Development Plan (1970-74), which calls for extensive drainage works to combat soil salinity as well as increases in the area under irrigation and in cropping intensity, in order to achieve self-sufficiency in agricultural production -- particularly of wheat and barley. The Plan allocates nearly 30 percent of total investment for agriculture, including support for the grain storage program. The government has shown considerable interest in developing model projects, e.g. the Lower Khalis project, and in improving all basic agricultural inputs. The achievement of Plan targets would represent a major improve- ment in the administration's capacity for project preparation and implement- ation. Foodgrain Production 25. Wheat and barley production has been marked by wide annual fluctuations and relatively low yields. Wheat production rose from 0.8 million tons in 1966 to 1.2 million tons in 1968, followed by a drop to about 0.5 million tons in 1971 because of poor rainfall recovering to nearly 2 million tons in 1972. Barley production has been more stable, but has fluctuated between 0.7 million and 0.9 million tons in 1970 and 71. Iraq, an exporter of cereal until the early 1950's, imported about 0.4  - 8 - million tons of wheat and barley in 1969 and 1970. Imports rose to 1.4 million tons in 1971 because of the very poor crop. Over the last five years, foodstuffs have constituted, in value, about half of Iraq's consumer goods imports. While the magnitude of total foodgrain imports is expected to decline as a result of benefits derived from current development schemes, Iraq is likely to remain a net importer of grains in the foreseeable future. Based on consumption trends and projections of future production increases, imports are expected to stabilize at about 750,000 tons per annum over the next ten years. Grain Board 26. The responsibility for handling this substantial volume of grain imports rests with the Grain Board, part of the State Organization for Grain and Enterprises. The Board presently owns and operates eight modern silos used. mainly to store grain purchased from the cooperative farms. The Board is also responsible for quality control and for determining, under the guidance of the Ministry of Economics, pricing policies and marketing strategies. All new grain storage projects are prepared by Grain Board staff. The Board is expected to be largely self-sufficient financially within certain guidelines laid down by the government, which has generally tended to safeguard consumer interests by limiting the prices charged by the Board for grain sold to the state-owned General Company of Flour Mills. Part of any trading profit is retained by the Board and part is passed on to the Development Plan fund. Funds for new projects are provided in the main from budgetary allocations. The Boardts staff are well qualified and experienced and its operations are efficiently managed. 27. In the past due primarily to its lack of storage facilities, the Grain Board has purchased only nominal amounts of domestically-produced grain, most of which has been marketed by private traders whose handling and distribution methods are poor and whose storage facilities are frequently open courtyards exposed to the elements and rodents. In May 1972 a resolution of the Council on Regulating Trade gave formal expression to the policy currently being pursued by the Grain Board of participating more actively in the domestic grain trade. To do this the Grain Board must have more storage facilities, even taking account of the 10 new silos under construction with bilateral aid. The government's aim is to enable the Grain Board to purchase enough of the domestically-produced grain by 1980 to supply the state-owned flour mills and at least 10 percent of the requirements of the private mills in addition to handling imports. In this way the Board would have a more significant impact on producer prices. Private traders would still handle nearly 70 percent of domestic production but they would face stronger competition from the Board and be compelled to reduce costs and profit margins.  _ 9 _ PARD IV - THE PFDJECT Project History 28. The need for additional modern grain storage facilities and an improved grain marketing system was identified during an economic mission to Iraq in late 1968. A feasibility study was completed in 1971 by the government's consultants, Iraq Consult (Iraq) and Scicon International (UK), using terms of reference prepared by the Bank and with periodic guidance provided by the Bank. Appraisal took place in January/February 1972, followed by further discussions between July and October on the extent of the grain storage requirements. Negotiations were held early in April 1973. The Iraqi delegation, led by the Economic Adviser to the Revolutionary Command Council, Dr. Fakri Qaddori, included Mr. El-Amar, Director-General of the Grain Board and Dr. Zuhair Al-Dhahir, Director-General (Agriculture) in the Ministry of Planning. Project Description 29. The main features of the proposed project are summarized in Annex III, and described in detail in the report "Iraq: Appraisal of Grain Storage Project", (hiport No. 150a-PAo dated May 22, 1973), which is being circulated separately to the Executive Directors. Briefly, the proposed project consists of the construction and equipping of 14 silos and expansion of 4 existing silos for a total additional capacity of 540,000 tons, and the construction of a 20,000-ton transfer terminal silo at the port of Um Qasr. Eleven of the new units would be tenrinal silos, providing high storage capacity and a variety of handling services, for a total of 468,000 tons. The remainder would be less sophisticated gathering silos with individual capacities up to 16,000 tons. The project also provides for engineering consultants to assist with the design and construction of the new silo capacity, technical assistance and equipment for a mechanized inventory control and communications system, the employment of economic consultants to undertake a comprehensive study of grain pricing and marketing, and a training program for silo staff. 30. Under the proposed project, the Board would be able to purchase about 33 percent of the marketed domestic production of grain by 1980, most of -which would come from the state-controlled cooperatives. A linear programming model was devised to calculate the size and location of additional silos sufficient to provide, by 1980, a peak storage requirement of 928,000 tons, including expanded capacity at Basrah port silo to handle grain imports. Tpking into account the Grain Board's (by then) 18 silos (264,000 tons), warehouse storage (78,000) and storage available to it in government flour mills (26,ooo), the balance of 560,000 tons would be provided under the project.  - 10 - 31. The total cost of the project, net of taxes and excluding interest during construction, is estimated at about $92.4 million with a foreign exchange cost of about $43 million (48 percent). The proposed loan would cover the foreign exchange costs of the constraction and equipping of the silos and engineering consultancy services. Iraq would cover, besides the local currency costs of these items, the full cost of the design and implementation of the mechanized inventory control and communications system, the grain marketing and pricing study and training. 32. It is expected that it would take four years to construct all the project facilities following an 18-month period for design and contractor selection. Within the Grain Board, the Projects Department, which is currently implementing two bilateral aid projects, would be responsible for the construction of project facilities and the Technical Department for general project administration. Both departments are headed and staffed by qualified engineers. Four additional engineers would be recruited by the Projects Department. Procurement and Disbursements 33. Procurement of works or goods exceeding $100,000 would be by international competitive bidding in accordance with the Bank's guidelines. However three of the silo extensions and the expansion of handling capacity at the Kut, Baghdad and Basrah silos may call for the negotiated purchase of additional mechanical-electrical equipment from the original suppliers, all of whom are from Bank member-countries or Switzerland, subject to the prior approval of the Bank in each case. The total which may be exempted from international competitive bidding for this reason would be $2.5 million. There are no preferential tariffs between Iraq and member-countries that would affect bid evaluations nor is there any domestic manufacture of silo mechanical-electrical equipment. Procurement of works and goods costing less than $100,000 would be on the basis of local competition. The silo works would be grouped geographically into contracts for three or four silos covering both civil works and electro-mechanical equipment, each costing about $10.0 million. Rate of Return 34. An economic rate of return of 14 percent is expected from the project. Overall, the expansion of the Grain Board's activities would benefit the economy by about $11 million per annum at full project development. This benefit would be made up of a reduction in storage losses of two to three percent for the additional grain handled by the Board, a reduction in marketing costs by almost 50 percent for both bulk and bagged grain, a reduction in intermal transportation costs through bulk handling, a reduction in ocean shipping costs and increased production stimulated by a 14 percent increase in farmgate prices made possible by the Grain Board's deeper market penetration. On the basis of the projected farmgate price increases, the project would help provide an annual incremental income of $38 each for some 75,000 farmers participating in the cooperative societies.  - 11 - PART V - LEGAL lSINST1INTS AND AUTHORITY 35. The draft Loan Agreement between the Republic of Iraq and the Bank, the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement, the draft Supplementary Letter on Procurement, the draft Supplementary Letter on the operations of the Grain Board, and the text of a Resolution approving the proposed Loan are being distributed to the Executive Directors separately. The draft Loan documents generally follow the pattern of documents for similar projects. 36. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 37. I recommend that the Executive Directors approve the proposed Loan. Robert S. McNamara President Attachments May 23, 1973 Washington, D.C.   ANNST I COUNTBY DATA .OU NTRT: IRAQ ARIA: a35,eoO 8s2 POPULATION: 9.3 Millicn (1973. DSI TY, 23 per on2 BE to sr Orotth 3.2 I (fP- 't t' 1970) 81 per on2 oif nrabl 1. 'OI_JLAT(09 CHA2ACTSHISCS: HOlLTHl Cn,de Birth Rate 1000) 4.7.5 (1970' TOu3t.tion per phyieioD 3,774 (19) Crude Death Rate (per 1 ,D00 16., 1970) PoPulation per hospit.L bed 517 (1970) I,fat .Mortality (per 1,OOO live births) 16.2 (1967) NURkT9ONa TUP PER CAPITA: $320 (1970) SDCATION. Calorie iotak,- as S ot requ rge-to L ;9.1 (1964-66) .rAitLraqc rat. 1) ..26.0 (1969) Per c pita protein intake (grasemee) C !) (1964-66) Priay dOchwl anrolsent (S) 69.0 (1968) 32JSS NAncONAL P208UCT (1970):,S ANltA3AL RATS o0 G?_ ( ice in IS A ln ' 1con 65n 1 978 GNP at nailkot price. 3,374.4 MM) 7.2 60 .5. 9 Grono lo-e-tLn-t 608.0 18.0 2.4 49 15.0 c-s. N .tional S-oings 702.2 20.8 Currert Acanut Bolance 78.4 2.3 _ _ .)oortn oi Gods, NFS 1 192.6 35.3 n *.9 6.1 Ieporta of Codo, NFS 596.8 17.7 n.a. 2.7 15.2 .9UTPUT, LABUH FORCE AND 04('DUCTIVITY IN 1970 VaLue Added Lebor Force Value Added Per Irker (US S Million) S (0n S I S of rational average A,:rrL-uturo 755.1 20.9 1.4 55.3 545.15 21.7 !obotI y 1,873.6 51.8 O.L 15.8 4,731.19 213.9 ervicoO 981.8 27.3 0.7 28.9 1,358.33 61.4 Total/Average ) 613.2 100.0 2.5 100.0 2,211.56 100.0 1UBLIC FINANCE31 . All Ooesneu,ts 197 l CT a 197r72 C o Mr US0 ala.. S of ODP 3 ct thrae Years Us$ minS. US aIo. S ,r l1t thro o y . 7S$ acLnm. .urr-nt Leceipt 1.130.6 29.2 28.5 1,373.1 1,130.6 29.2 28.5 1,373.1 Currcn-- GopnAdture- (ipc. trs,-fers) 968.8 25.0 24.6 1,096.2 968.8 25.0 24.6 1,096.2 C.,.rot .utplu_/DCfic(t )-) 161.8 4.2 3.9 276., 161.8 4.2 3.9 276.9 Coolito! !pandlt-re 354.2 9.1 7.6 614.0 354.2 9.1 7.6 614.0 Ectorm-. A-sist-oco (not) 67.5 1.7 0.6 31.9 67.5 1.7 0.6 31.9 :RICES 6ND CHEDIT: tod oD year: Lione ral Price Indox Ihnk Credit to Pubil Sector BaSk Credit to P,-iate Sector indec 9 08mg. ___________ 1968 108.6 4.7 7(USj)ln.) S 1969 (I.5 2.7 314.4 12.7 198.2 . 1970 122.3 5.7 292.9 6.9 265.6 36.0 Jdno 1070 118.5 _ 348.3 _ 21. 9 Jor= 1971 127.2 7.3 160.2 14.9 278.0 13.7 !ALANCr OF PAYH9STS INi (1968-70) : ( UlLiono 5S) MCIHANJSS S7PORTS (Ac-a-. of tio loot three Years), 1968 1969 .42...(.. r Go,to of loodo, NFS 1 224.2 1,25334 1,330 3 oil ,l. 93.13 RC .r..s -f OSo-..l -so"l.. . 0, 1 718. _ 23-3 Rsoaorce Socolas 640.2 629.3 611.0 All other comomoditi.s 77.5 6.7 000000 Poymoento loot) - 476.7 - 470.3 - 504.3 Total 1162.3 100.0 Tr-nof.r. (net) 4.8 5.8 2.1 baance on Carre-t Account 168.3 164.8 108.8 Pri-ste Capit'l - 8.2 - 15.2 - 3.8 Pablic LT l..on. (net) - 1.8 - 13.4 - 20.7 Public LT CapItal - 1.5 - 0.3 - 0.3 Nle ST Loan. to Oil 5ooter 59.3 20.1 - ioCrsase (-1 in OffIcoal : ,erve. - 102.4 - 18.R - 26.1 UTSIHAL DFUT ON DIE332U 31.1971 Error- nd lioaion. - 113.7 - 137.2 - 55.9 HedMur nd Long-tsr, Crodts, Poblic 153.8 Non-Duiarnte6d Prt vato MLT n5. Pod of:_ 1970 1971 1972 Cra .. R .ev.. (USS cIt..) 476.4 462.2 > ! I-ITotal Outstonding and Diabt-.ed n.e. lint ocooro.. 9169 sin..)463.0 431.9 g9. 554(ot7 DIST SERVICE RATIO(19l9, 1W IBRWI'I LSSDINL * c2ar 3. 1973 ( s min.) Okttatnding nd Dl buraod 23.3 7 Undiabus-od 14.3 Outstanding Incl. Unmiiobbr.d 05o Rate o' Ptochana 1972 From Febroacy 1973 US$.(00 . 0D 0.329 US$1.00 . 0.296 ID 1.00 - $3.04 ID 1.00 - $3.38 Sn-ops, Middle Ea.t snd North Africa Ategio .Ma 23, 1973   ANNEX II Page 1 of 2 THE STATUS OF BANK GR3UP OPERATIONS IN IRAQ A. STATEXEMT OF BANK LOANS (as of April 30, 1973) US $ million Loan Amount (less cancellations) Number Year Borrower Purpose Bank Undisbursed 26-IRQ 1950 Iraq Flood Control 6.3 457-IRE 1966 Iraq Roads 19.0 1.9 788-IRQ 1971 Iraq Telecommunications 27.5 27.5 846-iRQ 1972 Iraq Education 12.9 12.9 *878-IRQ 1973 Iraq Lower Khalis 40.0 40.0 Total (less cancellations) 105.7 82.3 of which has been paid 8.5 Total now outstanding 97.2 Amount sold 0.3 of which has been repaid 0.3 - Total now held by Bank 97.2 Total undisbursed 82.3 B. STATEMENT OF IFC INVESTMENTS (as of April 30, 1973) Nil * Not yet declared effective.  ANNEX II Page 2 of 2 C. PROJECTS IN EXECUTION -t Ln No. 457 Road Project; US$ 19 million loan of July 22, 1966; Closing Date: June 30, 1973. Nearly all construction under the project has been completed save for some roadworle and bridge construction on the Ramadi-Haditha road which are not expected to be completed before the closing date of June 30, 1973, when an estimated $0.9 million (5 percent) of the loan will remain undisbursed. It is not expected that the Government will request a further extension of the c'lsing date. The Government has requested that some of the projected undisbursed balance be used to purchase additional road maintenance equipment and, subject to Bank scrutiny of the bid documents, this would be acceptable. Basic data collectionfhr the Road Transport Study has been completed. It is expected that the computation will be completed by September, 1973 and the road investment program prepared by the end of 1973. Ln No. 788 Telecommunications Project I; US$ 27.5 million loan of October 27, 1971; Closing Date: December 31, 1977. Satisfactory progress has been made with the placing of contracts for the microwave equipment and associated civil works and the long-distance switchgear. Tenders for the earth satellite facilities will be invited shortly. Partly as a result of currency revaluations, the contract for the microwave equipment will substantially exceed the amount allocated in the loan agreement. Higher than originally estimated contract costs may be expected on some of the items for which contracts have not yet been awarded. Supplementary bank financing may be recommended. Ln No. 846 Education Project; US$ 12.9 million loan of June 30, 1972; Closing Date: December 31, 1977. The Loan became effective on December 18, 1972. The Director of the Project Implementation Unit took up his post in August 1972, and the Inter- Ministerial Coordinating Committee has been set up. The Government is in the process of selecting consultant architects. The project is expected to be completed according to schedule and within the costs estimated in the Appraisal Report. Ln. No. 878 Lower Khalis Irrigation Project; US$ 40 million loan of January 25, 1973; Closing Date: June 30, 1979. The effective date of April 25, 1973 has been extended to May 25, 1973 to enable the Government to submit the ratification and other documents pertaining to effectiveness to the Bank. Europe, Middle East and Niorth Africa Region May 23, 1973 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX III Page 1 of 4 IRAQ - GRAIN STORAGE PROJECT LOAN AND PROJECT SUMMARY BORROWER: Republic of Iraq AMOUNT: US$ 40.0 million equivalent TERMS: Payable in 25 years, with 6-3/4 years grace, at 7