Exchange of Notes concerning Yen Loans to the Republic of Iraq

1. On 5 April 2018, Mr. Fumio Iwai, Ambassador of Japan to the Republic of Iraq, and H.E. Mr. Khalil Ismail Abdulsahib Al-Mosawi, Ambassador-Designate of the Republic of Iraq to Japan, signed and exchanged notes concerning the provision of yen loans for “Basra Water Supply Improvement Project (II)” and “Irrigation Sector Loan Project (Phase 2)” (total loan provision of up to approximately 332 million US dollars) in the presence of Mr. Shinzo Abe, Prime Minister of Japan, and H.E. Dr. Haider Al-Abadi, Prime Minister of the Republic of Iraq in Tokyo.

2. Overview of the projects
(1) Basra Water Supply Improvement Project (II) (approx. 185 million US dollars)
(a) Iraqi National Development Plan (NDP) 2013-2017 presents the policy on the water supply sector to secure drinking water for all Iraqis. It sets a target to increase access to safe drinking water up to 95% by 2025 as its primary goal. The project is described in the NDP 2013-2017 as a prioritized project which addresses the improvement of the access to safe drinking water through the rehabilitation of water supply.
(b) While the southern Iraq centering around Basra, where the security situation is relatively stable, is an important region as a bridgehead of the industrial development of Iraq, inadequate water supply along with power shortage poses a serious social problem. Therefore, safe and stable water supply underlying a basis of economic activities is an urgent issue to be addressed in the region targeting the nationwide reconstruction of Iraq after defeating ISIL, following “Kuwait International Conference for Reconstruction of Iraq”, held in February.
(c) In light of such circumstances, this project as the second term loan for “Basra Water Supply Improvement Project”, the initial notes of which were signed and exchanged in July 2007, aims to improve drinking water supply in the cities of Basra and Hartha in Basra governorate by rehabilitating water supply facilities. Ultimately, it is expected to contribute to strengthening basic economic infrastructure of Iraq, .

(2) Irrigation Sector Loan Project (Phase 2)(approx. 147 million US dollars)
(a) The agricultural sector in Iraq is important as it dominates nearly 10% of GDP, and is particularly expected to provide job opportunities mainly in the rural areas. On the other hand, despite the fact that most of the land of Iraq belongs to the desert climate and that irrigation farming is indispensable in many areas, such issues as obsolescence of irrigation infrastructure, salinization in irrigated farmlands, and inadequate water resource management remains hindrance to improved agricultural productivity. This also raises a concern about further decrease of irrigated cultivation land.
(b) The agricultural production declined as a consequence of ISIL’s invasion in Iraq in the northwest, particularly in Ninawa governorate. Besides, the countryside is facing chronic food shortage resulting from the occurrence of internal displaced peoples.
(c) In light of such circumstances, this project as the phase two of “Irrigation Sector Loan Project”, the initial notes of which were signed and exchanged in January 2007, aims to increase the agricultural production by rehabilitating and recovering irrigation and drainage facilities as well as farmlands mainly in basin of the Tigris and the Euphrates rivers. Ultimately, it is expected to contribute to the economic and social recovery of Iraq.