World Bank Report on Wadi Tharthar 1954

7/29/2019 World Bank Report on Wadi Tharthar 1954

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A.S. 20RESTRICTED

Th's report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

FIRST LOAN ADMINISTRATION REPORT

ON

THE LOAN TO IRAQ

OF

June 15 , 1950

June 3, 1954

Departmert of OperationsAs D U&& a a.UU& ]East


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CURRENCY EWUIVALENTS

UNIT iraqi dinar

U.S. cents per currency unit 280.00

Currency units per U.S. dollar .357 143


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FIRST LOAN_ADaNISTRATION REPORTVOTJ rxV `C)AW T r) TPAnl

IN1TRODUCTION

1. This report deals with th e loan to Iraa cn the 11adi ThartharProject, Loan No. 26-1cn^ signed June rl, 1950r -It covers the periodfrom that date to April 30, 1954.

20 Following the Vice-President:s visit to the Middle East inl7arch 1949, a Bank mission went to Iraq in Nay of the same year to studythe cuun-ry's economic situation, th e possiDblitles io r the establish-ment of a development agency, and the e:dsting plans for flood controlprojects. After studying the mission!s recommendations, Bank represen-tatives went to London in August 1949 to discuss with British and !raqiofficials the f-inancing of flood control measures, and the capitalneeds of the Iraqi Railways. Shortly thereafter the Export CreditsGuarantee Department of thae United hLingdom made a T 3 milaion railwaydevelopment loan to Iraq. After further discussions with the IraqiGovernment, the i-adi Tharthar flood control project was considered forBank assistance. Negotiations were started in jondon in April 1950 andculminated in the signing of the Loan Agreement and two supplementaryagreements (an Indenture of Assignment and a Project Funds Agreement) inIiashington on June 15 , 1950.

3. later that year various additional development schemes, invol-ving irrigation projects, the purchase of agricultural machinery, and theerection of grain storage facilities, were brought to the Bank's atten-tion. A Bank mission examined the proposals, and in Februarx 1951 the

Bank expressed its willingness to negotiate loans to aid Iraq wfith theseprojects. Iraq, however, felt that her imDroved financial oositionwarranted financing them from her owqn resources. An oil refinery proe ctwas also discussed with a view to Bank assistance but, when the Bank andIraqi representatives disagreed on i ts technical justification, thelatter made their own financing arrangements. At the request of theIraqi Government, a General Sur-vey 1Mission from the Bank visited the coun-tr y in the spring of 1951. Its report was oresented to the Goverunentin February 1952.

4. In I4arch 1953, in the course of a tour of Middle Eastern membercountries, the President of the Bank visited Iraq.


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A M tnD T n A T Alit aI [lir LlV2t.LI

5. Te ,oanl was uiaue onl U1Ue 15, 1950V aLU U t , . V cti-f1eJJV n

July 12, 1951. It is a 15-year loan fo r 112.8 million and carries aninterest rate of 3-3f47, incl-uding 1, sbLaUUU-Y QoIfMllss1n. SemiL-anU1ualpayments are due to begin in April, 1956 and will retire the Loan onuctober 1, 56>'. 6,6066,996.93 had been disbursed by April 30, i95I4 andanother ,4h,723.35 had been committed under irrevocable letters of creditguaranteed by the Bankc.

6, Schedule 4 of the Loan Agreement designates a part of tn e Loan,amounting to "l,700,000, to cover interest and loan charges durinr theconstruction period; payments fo r both have been charged to the LoanAccount when due. The Borrower has not been reauested to deliver bondsto the Bank as provided in article VI of the Loan Agreement,

7. Unlike other loan agreements concluded by the Bank, the one fo rthe IJadi Tharthar project does not include the "Negative Pledge Clause".In its place, an Indenture of Assignment assigns to the Bank as securityfor the payment of the Loan and the Bonds any and all of Iraq's rightsto oil royalties under the concessions held by the Iraq Petroleum'Company,the Basrah Petroleum Company, and the ilosul Petroleum Company. In theevent of the Bank having to invoke the security provision, Iraq hasarranged with th e British Treasury that palnyents to the Bank out of itso il revenues, accruing in sterlings may be exchanged fo r the currenciesrequired for th e service of the Loan. As pointed out in Part I I I below,as a resul t of an agreement signed in 1951, Iraqts o il royalt ies haveincreased far more rapidly than they twere expected to increase when the

Loan Agreement was signed.

80 A Project Funds Agreement between the Iraqi Government, theNational Bank of Irq;. nd thp 3 ank nrovidpes thnt snecifiPe aqmountq.required for the internal costs of the project, are to be said out ofoil royalties into a Project Funds Account. A orocedure has been esta-blished which ensures that, funds withdrawn from this Account are spentonly on th e nroiect .

* Additional data may be found in the followring reports circulated tothe Executive Directors:

(a) P.5 - Report and Recommendations of the President to the EkecutiveDirectvors on the proposed Loan for the 'Wadi Tharthar FLood ControlProject of the Kingdom of Iraq, June 12, 1950,(R.g33 4 ).

(b)L.85.a-Technical Report on the ladi Tharthar Flood Control -Projectin Iraq, June 7, 1950,(R-334).


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B. THE PROJECT

9. The Tigris runs swiftly and rises suddenly. Its annual floods,fed by heavy rains and melting snow from the Zagros Ranges flanlcing

southern Turkey, are often uncontrollable. Even a local rainstorm inthe Zaeros can produce great changes in the river level in a few hours,and a rise of from 8 to 12 feet in one day is not unusual. At Baghdadthe river discharges a minimum of 11;900 cubic feet per second inSeptember and a maximum of 106,650 cubic feet per second in April, witha rise in ltevel of 18 feet, Leves hiiilt to contain peak floods havein the past proved inadequate and, to protect Baghdad from disaster, ithas often been necessary to breach the r iver ' s eastern banks far upstream,thus flooding valuable crop lands. The Wadi Tharthar Project is designedto protect -,-ban re-as and p,%eTreventcrop Incses by, divrtin p t e t i l l.r ThI~.e+ i~v -r1 -Ja~ -~- ,rv-,-E, I- ,+4-Vdangerous floods from the Tigris to thel'Jadi Tharthar depression, abarre V 11w-1or lyr;rg b-4,^.- +1ho rlgw; -4 +h -,hnA -h^k-+ an o1

vaaa Y -s . , l en _l _ I_ ar- h. E p Ua _ u. 60 k ivmeters from Samarra and approximately 65 kilometers northwest of Baghdad.

10. The Project was conceived as the first stage of a more compre-h1ensive unAertakin, g w h 4 s c h mfu'd provide, in aJi-l4,&:on -o -lo -- - -4-L L kiU L VIN 11 vvvU .- u U, L..LL C L ' J U L . UV L.J'(4 'JV L water storage and regulation for power and irrigation purposes. The basiccojUIIp1otnen U_L IJele 1UUUooIu convurUo. prUJojecU WteI-.c vU_J.g xIl.L ay U.1 .Ltdg : d(l . .UvRthe Tigris near Samarra (approximately 100 kilometers upstream from Baghdad)to dam the floods, and a floodway along which the water diverted by the bar-rage would flow to the 1iadi Tharthar. Ancillary to the dam and floodway weretne necessary levees and training works, an inlet channel with a regulator,and the relocation of the existing roads, railways and structures nearSamarra.

11. The diversion of Tigris floods to the wadi Tharthar will reducethe public expenditure on relief and repairs of flood damage. The unusuallydisastrous floods in the spring of 1954 provide a striking example of th eenormous sums that are involved. One and one-half million acres were floodedand the damage from this flood alone has been conservatively estimated ashigh as ID 20 million.

C. PROGRESS OF THE PROJECT

12. The Loan Agreement provides that the Project will be supervisedby an engineering consultant or firm, and that the construction work willbe carried out by con-tractors in each case satisfactory to the Bank. Thepreliminary estimates and engineering designs for this project we re carried

out by the Irrigation Development Commission which was the agencyiemployedby the Ministry of Public Works to prepare plans for the developmieit ofIraq's water resources. The Government of Iraq engaged Messrs. Coode,Vaughan-Lee, Fran 'k a-d Gyther of London as its consulting engineers for theproject, This firm was charged with the responsibility of reviewing th epreliminary designs, preparing final designs and specifications, Snd super-vising both the award of contracts and the work of the contractors.


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13. The contract for the first part of the project - the excavatingof the channel and the related works - was awarded on the basis of com-petit ive bidding to 11Iessrs. Balfour Beatty & Co, Ltd,of London towrards the endof 1951. Both th e consulting engineers and the contracting firm were

regarded by the Bank as being entirely satisfactory. Representatives ofthe Bank have periodically visited Iraq to inspect the progress being madeon th e project and satisfactory progress reports on the diversion bund andchannel have been received by the Bank regularly since th e summer of 1952.

lb. WJork on the first na r t of' th e nroipct . which started in December1951 advanced more slowly than had been expected as there were considerabledelavs in thp dpliverv of Paluinmpnt Followinn' the arrival of the maiorpart of the plant during the third quarter of 1952, however, some of thelos t ti me was made p1 0 and progress hy th e end of that year was fe l t to besatisfactory although the f inal items of equipment were no t received untilwell into 1953.

1 . As monntriio+;n nrno Pr1prI +.in opnp-'l I wirniirh nnr i tPc; an nf .hp.project have been changed appreciably. The main objective is still thediversionr of flood waters but, as now p l a r e -he brgull be huiltso as to make possible ultimately th e irrigation of from 200,000 to 300,000acres betvwveen S a m a r r a an d BPahi-inda a n d thae g-,eneration of p o s s i b l y a' s r.u-h -

125,000 kw. of electric power, The barrage itself has been relocated-pposite +he to-W of Samarm...7 .. dAW. -e fror. t .heLA1- site and its

height has been increased to create an enlarged storage reservoir. A powerintakle st -curs no ----- 4ted ln the esignand- -- e ntv t4--4o the,Ishaqi irrigation canal is to be bui l t into the barrage structure as well.Th e unesucso he oirlna design have been eli.-,inated. Th e capac,tof both the regulator and the floodway to the Wadi Tharthar have been in-creased. Although the capacity of the floodwVay has been increased, it hasbeen possible to reduce the size of th e excavated channel to th e Wadi Thartharto tLh.aLt s terequi1red0 o U f - r n i s h propIe uT raVals fo r i.B bIuiiu. The c r i a n g e s

have been made to improve the project and broaden i ts scope, and at the samebime to reduce th e cos=ts of some elements of it . Some of th e cnanges havebeen prompted by the experience gained from the devastating flood in the

.. t ofr'Isp- ng of 1,..L4.

16. Contract No.1 fo r th e first stage of the project, the excavationof the channel and related works had to be amended on account of the decisionto move th e s i t e Of th e barrage, wnicl IS to be built under Contract No.2.The original plans called fo r a diversion channel of some 60 Km. with a bundabout 50 hm. long, Mioving the barrage dowin stream has made it possible toshorten the channel and bund construction by about 7 Km. and to straightenthe aiignment of- the barxrage, regulator, and embankments so as to save aconsiderable amount of embankment. The work now consists of a bund or embank-ment and pi lot channel with only about 10 Km. of excavated floodway throughhigh land.


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17. Contract No.2 fo r the construction of the Samarra barrage waswardred by the Development Boardr in Fphriaqrr 19< to th e Genman firm E.D.

Zublin, Duisburg, on the basis of international bidding. The decision torelocat.e +.he b 'arrag and proriAde for the ul+mate inqt2AAnon of nn-werwas no t made until af ter this contract had been awarded. As a result ofthis relocatio. it has been possib1e to reduce the len.gth of he barrageand to carry the highway to Samarra over the barrage, regulator and embank-mrents, and to ear.Wr a railuygn2 dJirn"oJ^" overny +vrO of +thei e.m19aI,m.ts +ndt

regulator, thus eliminating separate bridges. Also, at the present sitethe barrage can be bui l t "in the dry"- to the rIght of the main channel an.da closing bank constructed across th e main channel af ter th e barrage is

-1spetd I+A T ' n e toua theclosi 1 IA 4 1 - ng bar=- before the -floods in

the spring of 1956. The present contract will include the intake structurePor z_- _P _1 nt -. X _ .z-r n rl no n I_..LUs ' 11:A-i~.J.lv .LdX dD V ZJv5LJ. L U Uy .L.VU gIIU -- Liig U l l L U J e. 11 Vi >. rUV.

capacity. The drawings fo r th e engineering and design of the main dam andassociated works ha-ve not yet been compleTed but thI contra2ctor has star;t edto make borings and carry out other prelimirary work in accordance withgeneral plans.* Revised specifications and cost schedules are also beingprepared by the consulting engineers, The elimination of th e highway andrailway bridges, th e shortening of the channel and Dunad the straighteningof the alignment of the barrage, regulator, and embankinents, and the elimi-nation of the undersluices of the original design have a ll affected savings.On the other hand, the addition of the intake structure fo r the power plant,th e increase in the size of A the regulator and floodwTay, and th e raising oIthe height of th e dam have a l l increased the cost of the project, The finalcost w i l l be higher than th e or ig ina l est imate of ID 10.22 mil l ion .

18. The las t vis i t made to Baghdad by Bank engineers was in the la t terpart of April 195h. At that time it was found that, although the f i r s t partof the project was behind original construction schedules, it was progressingin a reasonably satisfactory manner. It is expected that construction -willhave advanced sufficiently to permit diversion of flood waters in the springof 1956.

19. Disbursements of IBRD funds have thus fa r been made: (a) fo rearth-moving equipment required fo r carrying the f i r s t stage, or ContractNo.l, the contract fo r th e diversion canal, and (b) fo r capitalized interestand commitment charges. An amount of 25.7 million is allocated in the Listog Goods for the equipment needed for Contract No.1 and over $5.4 millionhas been disbursed. The Iraqi Government has followed a ll the requirementsof the Project Funds Agreement and has duly paid to the National Bank th eamounts of local currency se t out in Schedule 1 of that Agreement. T Jp toJune 1, 1954, according to the Development Board's Directorate of Accounts,the actual sums paid to the contractors, in I raqi dinars, were ID 2,646,900

on Contract No.1 and ID 1,219,000 on Contract No,2.

20. The Bank-financed eqLipment, which is being supplied to the con-tractor and which will become his property on completion of the contract,is being paid fo r by th e contractor by deductions from gross earninps.


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These deductions, which amounted to only ID 61,900 up to the end of June17;95ns were sched-t , LeU lV toT Iia VrltlnJUthIrL'r Uarter and t I ne r e -

after. By the end of December 1953 ID 463,900 had been deductedl, and therer,mainder of thet dirllarL equi-J-VcA.LUri VI Ulthe cost V f the equiLLz1R,-1iW) 4,1oUU.iQ-i1

to about ID 1,660,100, is to be deducted from earnings over the 2-yearperiod to Decel-uber 1955.

21. The amount payable under Contract Tno.2 fo r the erection of thedam has not been determined because physical quantities have not yet beenestablished and detailed cost estimates have no t been prepared. The Listof Goods for the project will have to be revised to reflect the severalchanges in design of the project and the new cost figures. The changes inthe project ar e such that the project description in Schedule 2 of the LoanAgreement should be rewritten and the figures of estimated costs,in Schedule4 revised. The estimates of dinar costs for Contract No.1 haveinot yetbeen revised to take account of the new design. Under both contracts thenew designs are expected to result in reductions in local currency expendi-tures. If these expectations are realized the dinar payments to be madeto the National Bank in terms of Schedule l of the Project Funds Agreement(which was set up under the loan agreement to assure the availability oflocal currency for the project) will prove to be more than are needed.


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PART TI

POT.T TT(AT. STT'TATTON

229 Iraq is one of t A 9 the enf theOttoman Empire. It was originally administered by Britain under a Leagueof ;;ations madate. It has been an independent constitutional monarchysince 1932 and has been fortunate in having had relatively stable govern-ment. Iraq is n active mrermber of the Aab T-ena g e I+t ; aare of -tstrategic importance and has dealt firmly with the local Communist

C.,? 43 I L I U ~ d.4 . LZ LJJA.OC14II -e.Lt. ; Iiiiuitjer V-J U LX UL1idUA:I.LJ V.Jj U C . ' J U V. L J U 0

are elected on the basis of one to every 20,000 male I raqi subjects;lfJLiUiwhoseuL uers miia-y notJ exceeIu one-fow-th thU4 nuuUber of4L 1i4

are appointed by the King from among those who "by their acts have,gainedthie confidence and trust ofi tvhe people and tohose whco have an honorablepast in the service of th e Governanent and the country".

24. Dissatisfaction with the slow progress made in i'tplementing devel-opment plans springs in part from pUiblic awareness of th e recent greatincrease in o il revenues. At the same tilre a good deal of the criticismlevelled at the Government on this score undoubtedly arises from publicignorance of the considerable time that must elapse between the inceptionof a project and its realization.

PART IIIGENERALEC010,TC CONDITIONS

25. The outstanding feature of the I raqi economy in recent ye;ars hasbeen the rapid increase in o il production and the corresponding rise ino il revenues accruing to the Government. In August 1951 the Iraq Petrol-eum Company, which is owned by English, French and American interests,made an agreement, retroactive to January 1951, under which it and itsassociated companies undertook to turn over to the Iraq Government one-half of the profits from their combined operations and to raise th eannual rate of production from 6.7 million tons in 1950 to 30 milliontons by 1955.

26. Oil production has developed even rmore rapidly than scheduled.It was 8eh million tons in 1951, 13.1 million tons in 1952, and 28.2million tons in 1953. Production in 1953 almost reached the 195%1target.Royalties rose to about m 13 million in 1951, ID 38 million in 1952. andmore than ID 50 million in 1953, The 1953 revenues were approximatelyTm 8 million more than had been scheduled.


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2 7. A -4P h a s e n a b l e d r--AApid 4-crsLf 0 11 IIJ1I.L.U 1J4. d.fIVJL liiao 11 C L J 4 t U WLi d j J4 -U , i

production to take place. Oil consumption in the Eastern Hemisphere,w h c h Js main.ly su-,plp Ea.ster rn SlourceUsUp s.5 un Lc d- .L1a g au arate of 5-6% per year. In 1952 a 555-mile, 30" pipeline from Kirkuk toDanias Syr wit a capac i ty ofla L4 l l io rn tons per year, was comipleted,an d in September 1953 a 65-mile 24"? pipeline from Basrah to Fao on theFersiarl Gualf, -.with a capacity of o million tons per year, was compieteaoAlso, th e marketing of Iraq o il is easier because the coumtry acceptssterlin.g. Finally, a substantial part oI thie production lost in Iran hasbeen supplied by Iraq. On the other hand, if Iran should come back intoproduction, it is not expected tnat Iraq would suffer significantly. Theincrease in world demand should be sufficient to absorb Iranian oil.Iraq output, in act, could increase still further if' he termmial ofthe Kirkuk-Haifa pipeline, whlich is now unused because of the irab boycottOf Israel, is moved to Lebanon.

28 . The risinR:, revenues have given Iraq large resources with wThichto finance it s development program, The Government established

aDevelopmrent Board in 1950 to plan and carry out a program, and original-ly a ll of the income from o il was earmarked for tVe Board. In Mlarch 1952,however, new legislation was adopted under which 30% of future revenueswere assigned to thle ordinary Government budget. This action has notresulted in a reduction in the funds that had been estimated in 1950would be available to the Board; oil revenues have increased so rapidlythat the 70% remaining to the Board has actually exceeded the totaloriginal 1950 estimates. The Board was originally given a large degreeof autonomnr, but Ln July 1953, as a result of a reorganization, it wasmore closely integrated waith Government proper, and a member of th eCabinet, th e 1Uinister of TDevelopment, was made in large part responsiblefor it s operations.

...p Thp Boardl inrow earr-yangf ou t an imnvrestmentpro> rntmof aboutID 155 million covering the 6-year period ending in 1956. About ID 32millinn r ha d b e e n nn+.i i , l 1r allrc-ni-ate+d ton th e 1it-m + 3 rheo11,ll +Iha fiscral n

ending March 31, 1953. An estimated additional m 35 million was allo-catedt+o +he 1,o'nd in 1Q53-54. As of Marcih 31, QI).g -toa h,men+sincluding loans, advances, etc., 1ere31,327,h30, of which I g millionw as 1.ri+.thdrav.nm fo r th,e orrinar,rn hl,e+.. of +-h in dernimore +h- Tm Amillion consists of loans to other government departments and agencies

suchs t-h Bagh.l_d b_l tren-r1ce, + v h e o refiney the A ric',,1 eMachinery Administration and various municipalities. It is impossible tosa y howr r..uch of th e latter t+vwrO nmo,vn-ts r e l e a s e d to th e C.vA itsagencies has been actually disbursed. The fact that actual expenditureon development has bencn id rby 'o t t r r than. the available income isnot surprising because it takes time in any country to plan and ge t long-term proJects u*d-r jay on a sound basis. Iraq has bQeen handicapped in-addition by a shortage of experienced engineers, administrators and otherthrbedimen task fo r whicuh -L r vtUlas ben va-dbl1the imLmense task for which it has been made resnonsible.


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30. Expenditures under the capital works item of the extraordinarybudget (against the amounts approved by the Development Board fo r disburse-ment by the Government) were ID 2.76 million for 1951-52 and ID 4.59 millionfor 1952-53. The Development Board has approved capital works expenditures

of ID 4 million for 1953-54 and ID 6 million for 1954-55.31. The 30% of oil revenues allocated to the Government since M4arch31. 1952 have enabled Government expenditures to rise. Regular budget ex-penditures rose from ID 28 million in 1951-52 to iD 51,227,58h in 1953-54.The 195h-q5 budaet. already apDroved by the Cabinet, amounts to ID 54 million.Expenditures have reached these magnitudes without thus far throwing thehbudget ni t nf n nalan ReGeints in 19q9-0 were swelled by a snecial ID 7.5million settlement of the Gold Clause dispute with the Iraq Petroleum Company.There hnR even hbpn some reduition nf th e internal debt; whilh stnod Pt onlyID 7 million as of lMarch 31, 1954.

32. Almost every type of expenditure has been increasing. Outlaysfor defence and police, for example, were budgeted at ID 18.3 million in1953-54 as compared with only ID 9.7 million in 1951-52. Expenditureson health, education, agriculture, and public works have risen significantly.Also, the Government has provided out of its regular budget for increasesin the capital of government banks, including the Industrial Bank, th eAgricultural Bank, and the Chattel ilortgage Bank, and the Realty iHortgageBank.

33. The rapid increase in o il production and the rapid rise in oilrevenues accruing to the country has not yet had much effect on productionelsewhere in the economy. Oil production has increased without addingsignificant numbers to the permanent working force in th e industry in

Iraq and without requiring a significant volume of subsidiary or ancil larydomestic investment. Also, the effects of the increased exports of oilare different from those of increases in exports of other commodities.The oil producers hold concessions from the Government. so that a verylarge part of Iraq's income from o il exports accrues in the f i r s t instanceto the Government rather than to the local population. The incomes ofthe latter will increase only as the Government spends the oil revenueslocally alnd as outout outside the o il industrv rises as a result o f theincreased domestic investment.

34. Available figures indicate that agricultural production did notchange much in 1952 and 1953 as comnpreri with I 1i - nereai PnArt+sdropped sharply in 1952, but it is difficult to know whether this wasdue to a decline in outputn ii reased domestic consumption, or to acombination of both. Ulheat and rice output rose slightly in 1953; thebarley crp may have increased by as ucith as 20% * Date production, how-ever, has tended to fall slightly. The trend of prices has been down, sot-hat incom-.e h-as pnrob%ablvy fallen ansd e Lo-rtJncorm .rom. ra%J I4ns-,as alsofallen. The terms of trade fo r commodities other than oil have moved

a small part of total production, increased slightly over the period.


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35. The value of exports other than oil is now in the neighborhoodof ID 20-25 million. By contrast receipts from oil were more than ID50 million in 1953.

36. Imports have risen markedly since 1950. Imports other than oilcompany imports were approximately iD 29 million in 1950, rose to aboutID 42 million in 1951, to about ID 47 million in 1952 and to ID 5.5rmillion in 1953, The large increase in imports has been inanced, orcourse, by the rising oil revenues. It has been made possible by therelaxation of import restrictions.

37. Imports of both conswuption goods and investment goods have risensubstantial ly. The increase in imports of investment goods has beencaused principally by the increase in actual investmnent expendituures ofthe Development Board and the Government i tse l f , and to a lesser extentby the increase in private investment expenditures. These increased in-

vestment expenditures, together with tl;e rising expenditures of theGovernment on defence, internal security, and social services, have re -sulted in higher employment and enlarged purchasing power fo r th e popula-tion as a whole. This increased purchasing power, howJever, has apparentlybeen used alnost as rapidly as it has been created, to purchase imports.The money supply, therefore, has remained remarkably stable over thepast 4 years and has only recently shown a tendency to rise.

Iraq - Currency, Deposits, Credit and Prices(Mioney values in millions of dinars)

End End Fnd RnM1950 1951 1952 1953

Notes and coins in circulation (net) 3h.5 32.2 30,0 34.3Deposits with romnrr=r-i1 hbanksm M .8 1,,A lJ.g I 3Commercial bank credit outstanding a/ o.0 11.3 10.8 1565

WIholesale price index b/ 103 11 2 116 96Cost of liZrir e 7 91 98 101 91

Bills discounted and advances to other than government.b/ 1949 - 100j/ 1949 100, Baghdad

38. It should be noted that, although there was an increase in 1953in the volume of commercial bank credit extended to the -rivate sectorof the economy, there are as ye t no signs of a domestic inflation.,Despite the recent rise in money supply, wholesale and consumer priceshave fallen quite sharply. This f a l l in prices is probably accountedfor principallv bv the lioeral import policy, tnae.,r wii+h a f *the cost of certain imported consumer goods, as well as by better cropsin 1953


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39. In spite of the growth of imports Iraq has had very suobstan-tial surpluses in its ovrerall balance of payments in recent years. In1952 Iraq's foreign assets increased by approxdmately ID 11 million, andin 1953 by almost ID 23 million. In January 1954 there was a furtherincrease of about ID 10 million. At the end of January 1954 Iraqtsforeign assets stood at more than ID 93 million which was about doublewhat they had been four years earlier.

40. It is abundantly clear that thus far at least Iraq's financialresources have increased more rapidly than the country has been ableto spend them, The rate of development expenditure is increasing, hcw-.ever, and it remains to be seen whether it will rise to a level atwhich all oil revenues will be currently used. The economic and financialsituation is basically sound. The free iimort policy has kept internalprices down, enabling Iraq thus far to avoid the sort of domestic infla-tion that might adversely affect the sound development of the non-oilsector of the economy, especially the competitive position of exports,


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I R A Q

BASIC STPTISTICS

Area 179000 sq. miles

Population (estimated) 5 million

Trade statistics (millions of Iraqi dinars)

1950 1951 1952 1953

Total exports 50.3 66.1 102.9 11h5.4by foreign oil companies 28.7 37.1 83.0 125.6

Total imports, c.i.f. 37.6 51.0 61.8 68,7by foreign oil companies 8.4 8. 7 14e4 13e2

Principal e:xports (thousandsof metric tons)

1950 1951 1952 1953

Barley 463 440 339 489Dates 211 33 9 24X2 251Petroleum 6,070 7,957 17,701 26,869

Balance of payments (milliors of Iraqi dinars)

1950 1951 1952

Transactions oF foreign-ownedoil companiies (net foreign + 7.9 + 19-3 4 39.7

exchange surrendered)

Other goods and services + .9 - 809 - 25.9(net balance)

Surplus, current account t 8.8 + 10.1 + 13,8

Foreign assets* (millions of Iraqi dinars)

Other banks 8&2 9.9 15.3 1807

Total 50.1 505 61.5 83.2

*Almost exclusively sterling


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Money suppLy (millions of Iraqi dinars) End of year

1950 1951 1952 1953

Currency 34.5 32a2 30e 34h3Deposit monev V- )y IIv

Total -,o ,7 n l. a A.

Prices

1949 100

19 0 1951 192 1953

-41olesale prices (All goods) 103 11 2 116 96

Cost of iiving (Baghdad) 91 98 10 4 91

Budget (millions of I raqi dinars)

1950/5J 1951/52 1952/53 * 1953/54 *

Revenue 32.2 36.7 48.8 142.3Expenditures 28.3 2842 o.2 U.oSurplus or deficit + 3.9 + 8.5 + 8.6 5.7

* Estinates

Development Board (inillions of Iraqi dinars)

1951/52 1952/53 1953/54

Receipts

Planned 10.5 2065 33.9Actual 8.ei 23.7

Disbursements

Planned expenditure on econonic 9.4 20o5 2FLJdevelopment

Actual 22.0

Documents

World Bank Report on Wadi Tharthar 1954