President of the Islamic Development Bank (IsDB) Ahmed Mohamed Ali says that the bank will aid Iraq, one of its member countries, with US$500mn for reconstruction efforts and will help ease Iraq’s debt to the IsDB by extending the length of time for reimbursement of previous loans acquired under Saddam Hussein.
“The loan is mainly for infrastructure development and social programmes like building schools and roads,” says Ali.
The 55-member IsDB, established by the Organisation of Islamic Conference (OIC), states its aim is to aid nations in the economic and social development of Muslim countries in accordance with Islamic law.
Ali claims US$5mn of the overall loan and an additional US$2mn of humanitarian aid to Iraq are in grant form.
He adds the IsDB does not have conditions Iraq must follow through with to receive the funds except that the funds be used in “viable projects to serve the Iraqi people.
A controversial issue facing Iraq is the estimated US$120bn heavy debt owed to nations that was incurred under Saddam Hussein, but Ali says the IsDB will not get involved in that matter because of its bilateral nature between Iraq and the other nations involved.
But the president of the IsDB has encouraged nations to forgive Iraq’s debt only if they can afford to do so.