Iraq official slams donors on projects

29/05/2007 | Paul Melly

Rebuilding efforts sapped by poor coordination

A senior Iraqi official has slammed multilateral and bilateral donors for undermining reconstruction efforts in the war-ravaged country. Rebuilding projects in Iraq are also being derailed because the money to launch them often fails to be disbursed out of fear, a top adviser to prime minister Nouri al-Maliki told Emerging Markets.

Former deputy finance minister Kamal Field Al-Basri said that the World Bank, UN agencies and bilateral donors “routinely fail” to provide precise information on their projects, hampering government efforts to oversee reconstruction. This is preventing the government from taking external aid into account when it schedules the financing of key projects, and attempts to make arrangements for maintenance work to keep them operational, he said.

The official cited the example of USAID support for agriculture, which is known to be substantial but passes unrecorded in the government’s project database. Field Al-Basri also said that because many officials have been imprisoned, their intimidated colleagues are reluctant to disburse the funds the authorities have mobilized for rebuilding and development. “They are afraid that their motives will be misinterpreted and they will end up in gaol,” Field Al-Basri said.

The situation is critical, with only half the 2006 investment budget actually spent, because of finance ministry controls on disbursement, security problems and local officials’ reluctance to take responsibility for expenditure approvals, the official said. The government sees a shift to more decentralized spending by local authorities as one way to tackle the delays to development spending. “They have already identified projects, and they have the money,” Field Al-Basri told Emerging Markets.

But local authorities are also rife with corruption, which Field Al-Basri conceded was a generalized problem. Nevertheless, he argued that its scale is probably overestimated by donors and watchdogs such as Transparency International. Iraq, he noted, has three official audit and transparency agencies. Parliamentarians want to question the Integrity Commission head over the delays its work causes to spending. The government’s spending capacity remains heavily dependent on oil revenues – and it may have to cut back this year’s $10 billion capital spending allocation – 24% of the total 2007 budget – because of a slippage in crude output from the targeted 1.7 million barrels per day, due to insecurity.

After an earlier upturn in output, insecurity is again eroding production flows. “The disruption to maintenance work is so severe that the authorities are able to disburse only one-fifth of the funds allocated to oil sector investment,” Field El-Basri said. The industry experienced similar problems in 2006, but the surge in oil prices softened the impact on revenue. This year, in a duller oil market, high prices have not come to the rescue.

Related stories

  • India – the coming force

    With China’s economy slowing, Brazil rocked by scandal and recession and Russia frozen out of world affairs and now beginning to pay the price, the world is increasingly looking to India to pick up the slack. By Shruti Chaturverdi

  • Asia's debt addiction

    Debt has become a cause for concern in every one of Asia’s biggest nations: one that has to be addressed before it metastasizes, spilling into the wider region and undermining the global economy. Of greatest concern is, of course, China.

  • Asia awakes to green bonds

    Asian borrowers are slowly starting to join the global trend of issuing bonds labelled as green. In fact, Asian companies have been issuing bonds for green purposes for years — but the attention the green branding attracts could stimulate the market and create a snowball effect that ultimately benefits the climate. By Matthew Thomas.

  • China and Russia: the odd couple

    The new, improved relationship between Russia and China is less a union backed by political interests and more a marriage of convenience as the global political situation pushes them more into bed together.

  • ADB's Nakao rebuffs claims of AIIB rivalry

Editor's Picks

In Focus

  1. No pain, no gain: Argentina gears up for necessary adjustment

  2. Deepening Petrobras scandal dogs Brazilian hopes of recovery