The total cost of the Housing & Urban Development Ministry project is estimated at $140 million, of which the World Bank will contribute $112 million.

The first of three project phases will focus on improving housing conditions in the poorest areas of three cities, reducing the vulnerability of households to earthquake risk by setting up an earthquake insurance and mitigation scheme, and providing technical assistance on housing sector reforms and project management.

The second phase will see the implementation of reforms prepared and adopted in phase 1 on a national level, as well as developing further policy reforms. The reforms will tackle issues such as credit rationing, deregulation, streamlining housing subsidy policies and improving living standards in run-down urban centres of historic cities.

Phase 3 will include the design and financing of a national fund for slum clearance.

If the project receives final approval from both the World Bank and the government, the housing & urban development minister will be in charge of the overall execution and co-ordination of the programme, while affiliated institutions National Land & Housing Organisation and Urban Development & Rehabilitation Organisation will be involved at the execution level.

There are now 64 million Iranians, more than half of whom are under the age of 20. By 2025, the Islamic republic is expected to have to accommodate a population of 100 million. The devastating earthquake that struck northwestern Iran on 22 June has further increased the pressure on the government to provide more and better housing for its population.

The World Bank has provided financing for the Tehran wastewater project and a primary healthcare and nutrition scheme since it resumed activities in Iran in May 2000 after a gap of seven years.