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Background information on the Trust Fund facility
In order to meet the funding requirements of the UNDG and World Bank reconstruction and development assistance to Iraq, the UNDG and the World Bank designed, at the request of donors attending the Iraq Donors Meeting held in New York on 24 June 2003, the International Reconstruction Fund Facility for Iraq, (the Facility). The Facility aims to help donors channel their resources and coordinate their support for reconstruction and development activities in Iraq, in line with the priority areas emerging from the Needs Assessment based UN and WB Strategic Transitional Programmes and validated by the Iraqi authorities.

The objective of the Facility is to ensure coordinated, flexible and swift donor response for financing priority expenditures, including reconstruction activities, sector-wide programmes, investment projects, technical assistance and other development activities.  The Facility will complement existing options available to donors wishing to contribute to the reconstruction of Iraq - such options include direct funding to executing agencies.

The proposed Facility will operate, to the extent possible, based on those principles which normally apply to multi-donor trust funds in a post-conflict situation.  The arrangements aim to ensure, in particular, that:

• Each project approved for funding is part of a priority programme of reconstruction and development activities validated by the Iraqi authorities, based on the Needs Assessment and formulated in consultation with donors and other partners.

• The activities financed by the donor community are implemented as much as possible by the Iraqis themselves, under the ownership and leadership of the Iraqi authorities, with the aim to help develop sustainable local capacities.

• Implementation and funding modalities: (i) provide for transparency and accountability; (ii) facilitate efficient and prompt delivery; and (iii) support the progressive development of a unified budget and coherent public expenditures process.

• A unified donor coordination and funding structure avoids the emergence of gaps and duplication in funding, inconsistency in policy advice and ensures sustained budget expenditure planning.

Structure
The Facility is a structure that establishes a coordinated arrangement whereby donors can fund activities administered by the Participating UN Organisations and/or activities administered by the World Bank, with an agreed structure for joint coordination and monitoring mechanisms. Close coordination is achieved through a joint Donor Committee and a unified UN/WB Facility Coordination Committee. 

The Donor Committee will oversee the activities of the Facility as a whole and endorse its overall priorities. The Facility Coordination Committee will serve as the administrative body for the World Bank and UNDG to work together to ensure coherence, coordinated planning, monitoring and reporting between UNDG and WB activities.

The “UNDG Iraq Trust Fund” will help finance the implementation of the activities entrusted to the UN system in Iraq by its executive bodies, particularly during the transition phase.  The UNDG Iraq Trust Fund will place emphasis on all of the sectors in which the UN has carried out needs assessments and will focus on funding quick-impact projects and transition activities, which need to be implemented in a rapid and flexible way. Its functions will cover technical assistance and capacity building across currently ten clusters and five cross-cutting thematic areas.

Relations with Donors
Under the UNDG Iraq Trust Fund, donors can earmark their contributions by sector/cross-cutting theme and/or by UN agency, and reports will be managed accordingly. However, with the new UN clusters that emerged after the Madrid Conference, there is now an opportunity for donors to give greater added-value support to nationally-validated cluster priorities and programmes harmonised with initiatives and assistance by other actors, by contributing at the cluster level.

The WB and UNDG organisations will utilise their complementary strengths in a coordinated manner to address the requirements identified in the Needs Assessment, each in accordance with its operational policies and comparative advantage:

• A donor will enter into an Administration Agreement with the respective Trust Fund Administrator, as the case may be.

• The UNDG and WB will both offer “holding accounts” as part of the Facility for the benefit of donors who may wish to deposit all or part of their contributions to an account pending their allocation decisions.

• The respective Trust Fund arrangements will terminate on the earlier of: (i) 31 December,  2007; or (ii) such date as the contribution funds will have been fully disbursed.
   

Relations with the Iraqi Authorities
The WB Iraq Trust Fund and the UNDG Iraq Trust Fund will work in close partnership with the Iraqi national authorities in order to ensure that gaps are filled and overlaps avoided and that there is consistency and coherence between Facility-financed activities and the overall Iraqi priorities and budget. 

The Iraqi-led development assistance coordination will be carried out by two entities in particular. (click here to access the graph illustrating Donor Coordination by Iraqi Institutions)

• The Iraqi Strategic Review Board will provide overall policy guidance for donor assistance and have the final approval authority on recommendations from the Ministries of Planning and Finance on allocation of international assistance to Iraq.

• The Iraqi Ministry of Planning and Development Cooperation (MoPDC), will be the interlocutor with the donor community and, in that context, serve as the Interim Iraqi Administration’s primarily liaison with the Facility.  It will ensure that resources are applied against Iraq’s prioritized needs and equitably distributed.  The Ministry will work closely with the Ministry of Finance to ensure conformity with the overall budgetary framework.

• The Iraq Strategic Review Board and MoPDC, in consultation with the interim ministers and under the guidance of the Governing Council, will define the Priority Programme based on the Needs Assessment and revise it as necessary in view of changes in the Iraqi budget, resources and economic circumstances.

• The Council for International Coordination (CIC) will be chaired by the MoPDC and provide advice and support to the Minister on coordination issues.

Links

UN Development Group (UNDG)
United Nations Development Programme (UNDP)
World Bank
International Reconstruction Fund Facility for Iraq