France to loan 430 mln euros to Iraq: ministry

France will grant a loan of 430 million euros in 2017 to Iraq whose budget is heavily burdened by the fight against jihadists and the fall in oil prices, said Saturday the French Ministry of Foreign Affairs, AFP.

French Foreign Minister Jean-Yves Le Drian told Iraqi Prime Minister Haider al-Abadi during a midday meeting in Baghdad that the funds would be released before the end of the year, according to the same source.

“France was present at the beginning of the fighting against Daesh”, the acronym designating the Islamic State group (EI) in Arabic, “it will also be present in the peace phase which is now opening,” said Mr. The Drian during a joint displacement with the French Minister of Armies, Florence Parly, in Iraq.

During the visit, he also handed Mr. Abadi an invitation from French President Emmanuel Macron to come to France.

It is a budgetary support loan to encourage substantive reforms and financial consolidation of the country. Like the World Bank, this loan requires the improvement of public finance management and the governance of public enterprises, as well as greater energy efficiency.

The IE lost more than 70% of the Iraqi territories it had conquered in 2014, including the emblematic city of Mosul, the second largest city in the country.

On Saturday, Iraqi forces, backed by air strikes and artillery fire from the international coalition, announced they had regained control of the Tal Afar center, one of the country’s last remaining strongholds.

Other countries have already granted budgetary or investment support loans to Iraq, such as Germany (500 million euros). The € 430 million package represents a major effort for France in the light of its budgetary constraints.

Mr. Macron, elected in May, decided notably to reduce by € 850 million the appropriations for the purchase of military equipment in 2017.

The bill for the Iraqi reconstruction is estimated between 700 and 1,000 billion dollars after long and violent fighting for the reconquest of jihadist strongholds like Mosul.

Initially, the reconquered cities must be cleared of mines and the basic services (water, health, etc.) restored, in order to allow the return of displaced populations. Iraq has 3.3 million IDPs out of a total population of 39 million. A total of 11 million people are in need of humanitarian assistance, according to the United Nations.

A donors’ conference is planned for the end of the year in Kuwait. Iraq is also seeking assistance from the International Monetary Fund (IMF).

The French loan, which lasts 17 years, offers a more favorable rate than market conditions (6.75%), a French diplomatic source said without further details.