By Mariam Karouny BEIRUT (Reuters) - The World Bank is seeking to finance development projects in areas in Iraq that the government has recaptured from Islamic State militants, its regional vice president said. Hafez Ghanem also said he would meet with Iraqi officials and discuss ways to help the government tackle a budget deficit caused by a drop in oil revenues when he visits Iraq this week. Cheap oil is ravaging Iraq's state finances and the government faces rising military spending from its battle against the hardline militant group Islamic State, which has killed thousands and destroyed services and infrastructure. The group overran a third of the country last summer and control territory in Iraq and Syria. "There are areas that the government liberated from Daesh (Islamic State) but it suffers from a lack of infrastructure, education and health (services). So I will try to see if we can help by financing projects to improve life in these areas," Ghanem said in an interview in Lebanon. BOOST FOR REGION The undertaking is part of a wider plan to boost the World Bank's investments in the Middle East and North Africa in the coming years, Ghanem told Reuters. "You have political problems, civil wars and security issues so it is difficult to achieve economic development. But at the same time I think that economic growth is important as part of the solution to political problems afflicting the region." In Syria, civil war has brought an economic collapse and almost two thirds of the population live in extreme poverty. Neighboring Lebanon hosts more than 1 million Syrian refugees and has lost billions of dollars in state revenues and other expenditures as a result of the conflict next door. The World Bank had set up a trust fund to support development projects in Lebanese communities under strain from the refugee influx, but that it received minimal funding. "We as the international community should help Lebanon to face this challenge. That is why as the World Bank we are not only increasing our investment in the country but we are also trying to bring in or convince other organizations to increase investments for Syrian refugees," he said. The bank wants to increase its portfolio in Lebanon to $2.3 billion from $1.1 billion in the next four years, Ghanem said, citing a government report that it needed $1 billion over at least two years to cope with the crisis. Other countries where spending would be stepped up include Tunisia and Egypt, he said. (Reporting by Mariam Karouny; Editing by Raissa Kasolowsky)
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