Monday, Aug 18, 2008

DOW JONES NEWSWIRES

Iraq needs around $400 billion over the next few years to rebuild its shattered infrastructure, the country's Finance Minister Bayan Jabor said Monday.

"We have conducted a scientific study which states that some $400 billion is needed to rebuild infrastructure," Jabor told the state-run al-Iraqia satellite channel.

"Our problem is how to administer money to finance reconstruction projects," he said.

Iraq's infrastructure was ravaged by decades of sanctions and wars during Saddam Hussein's reign, and by the U.S.-led invasion in 2003 and the violence that followed.

Reconstruction has been hampered by insurgent attacks, which have forced many projects to be halted and have diverted funds away from rebuilding into increased security.

High oil prices have been a boon for Iraq, which sits on the world's third largest oil reserves. Revenue from oil sales represents more than 90% of the country's national capital budget. Iraq has allocated some $70 billion for its 2008 budget, the highest so far. Next year's budget is expected to be even higher with one Iraqi lawmaker saying it would reach up to $100 billion.

Iraq's revenue from oil sales is expected to reach around $75 billion this year - the country's already sold $37 billion worth of crude oil in the first six months of 2008, compared with $40 billion in the whole of last year.

Jabor said most of the budget is being used to pay salaries for 4 million retired and still-in-service civil servants. Some $6 billion will be spent on food stuffs purchases to cover the food ration system the government is implementing.

Some $6 billion would also be spent on rebuilding infrastructure in the 18 Iraqi provinces. Jabor said Basra needs some $30 billion to rebuild its infrastructure whereas the government only allocated $300 million for the province this year.

Jabor said some $3 billion was allocated to the oil ministry this year for development projects designed to increase crude oil production, which currently stands at 2.4 million barrels a day.

The oil ministry has submitted a 10-year plan to increase production, Jabor said without elaborating. Iraqi Oil Minister Hussein al-Shahristani had said that Iraq plans to increase its crude oil production to 4.5 million barrels a day within the next five years.

-By Hassan Hafidh, Dow Jones Newswires; + 962 799 831 831; hassan.hafidh@dowjones.com

(END) Dow Jones Newswires

August 18, 2008 07:31 ET (11:31 GMT)