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World Bank Lends Iraq $1.2 Billion To Deal With Economic Shocks

The World Bank announced a $1.2 billion emergency loan for Iraq to help it deal with the economic shocks of terrorism and collapsing oil prices.

The loan will be available before the end of the year, Ferid Belhaj, a bank official who oversees Iraq, said December 17.

"These twin shocks...are threatening the stability of the country," he told Reuters, saying it was important to prevent Iraq from falling into deeper crisis.

"Iraq falling into chaos means an even more chaotic Middle East. At this particular juncture, nobody wants that. We have enough chaos," Belhaj said.

Iraq's state finances are heavily dependent on oil revenues, which have been hit by sinking prices. At the same time, Baghdad has had to ramp up military spending in its battle against the Islamic State group, which has taken over about a third of the country.

Despite these hardships, Belhaj said Iraq has committed to reforms to fix structural distortions in the inefficient government and energy sectors that drag on its economy.

Based on reporting by Reuters and World Bank