The government announced Tuesday that it will extend yen loans totaling 76.5 billion yen for reconstruction in Iraq — its first such assistance to the conflict-ravaged country in 20 years.

The untied loans will be the first disbursement from a yen loan package worth $3.5 billion that Tokyo pledged to Iraq at a donors’ conference in Madrid in 2003.

Japan suspended yen loans to Iraq in 1985 due to the war that broke out between Iran and Iraq in 1980, although it has continued to extend grants.

The loans consist of 36.8 billion yen to repair the Al-Mussaib power plant on the outskirts of Baghdad, 30.2 billion yen to repair and dredge Umm Qasr port in southern Iraq, and 9.5 billion yen to build irrigation facilities across the country, the Foreign Ministry said.

The Al-Mussaib power plant is critical to Baghdad, and Umm Qasr is Iraq’s most important port, ministry officials said.

Japan will extend the loans after a new Iraqi government is formed based on the results of last December’s national election, the ministry said.

Various groups in the Iraqi parliament have been unable to form a Cabinet, clouding prospects for the country’s future.

Japan initially planned to start withdrawing the Ground Self-Defense Force contingent from southern Iraq, where they are engaged in humanitarian assistance, in late March to shift its postwar contributions to economic aid.

But the delay in the formation of a new Iraqi government has prompted Tokyo to suspend the withdrawal.

“By providing yen loans, we’d like to support the efforts of Iraqi people to reconstruct and rebuild the country by themselves,” Foreign Minister Taro Aso told reporters Tuesday morning.

Loans to Mongolia

Japan and Mongolia signed an agreement Tuesday for Japan to provide Mongolia about 2.98 billion yen in yen loans for small business and environment projects.

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