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.

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