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Drop in Iraqi crude exports causes funding problems for UN 'oil-for-food' scheme

Drop in Iraqi crude exports causes funding problems for UN 'oil-for-food' scheme

With Baghdad suspending its crude exports for 30 days, the United Nations oil-for-food programme - a relief effort which draws its funding from Iraqi petroleum revenues - will face serious budgetary shortfalls, the Office running the scheme announced today.

The programme, which was already facing increasing financial difficulties due to the recent sharp drop in Iraqi oil exports, will lose an estimated $1.3 billion from expected revenues for the relief effort's current phase, set to run through 29 May, the Office of the Iraq Programme reported.

Further complicating matters, the current phase will likely face a budgetary shortfall of $1.6 billion, according to the Office. That figure does not include the transfer of approved applications from the previous phase to the current one.

"As at 8 April 2002, there were 824 approved applications from previous phases, with a total value of just under $2 billion, for which funds were not available," the Office said. "Accordingly, the cumulative estimated shortfall in funds for the purchase of humanitarian supplies under the programme, is $3.6 billion, excluding the additional funds which would be required to cover applications which are presently on hold by the Security Council Committee" monitoring the sanctions against Iraq.

The value of contracts placed on hold also rose over the past week by $40 million, with the total now estimated at $4.4 billion.