Iraq to seek up to $500 mln in loans from Islamic Development Bank

(Reuters) - Iraq will seek up to $500 million in loans from the Jeddah-based Islamic Development Bank (IDB) to help cover its projected deficit, complementing the country's return to the international debt market, according to the bond's prospectus. Baghdad wants to raise up to $6 billion in a series of dollar-denominated bonds, Iraq's first in nine years, to fund salaries as well as infrastructure projects in the oil and gas, electricity and transportation sectors.

The country's 2015 federal budget empowers the ministry of finance to draw additional financing from sources including the IDB, the prospectus said. Out of the $500 million, $225 milion would be used for the development and renovation of a major trade corridor that links Iraq with neighbouring countries, the document said. The IDB originally approved the financing in October 2013 and the multilateral lender has held discussions with Iraqi government officials in May of this year to explore further cooperation, an IDB spokesman said. "It is expected the IDB Group (the bank, its private sector arm, its insurance arm and its trade financing arm), would support both the public and the private sectors through project and trade financing."
OPEC's second-largest oil producer is seeking to finance a budget deficit caused by low oil prices and a war against militants occupying large swathes of the north and west.