UN chief presses Iraq on reconciliation

Reconciliation between Iraq's Shi'ite and Sunni communities is a key part of the strategy to defeat the Islamic State group, UN chief Ban Ki-Moon says.

UN Secretary General Ban Ki-Moon has called on the Iraqi government to step up efforts to foster reconciliation between the nation's Shi'ite and Sunni Muslim communities in order to combat Islamic State.

"National reconciliation is an important part of the strategy to defeat Daesh (Islamic State), who have ruthlessly exploited divisions and targeted the marginalised and disenfranchised," he told a joint news conference in Baghdad with Iraqi Prime Minister Haider al-Abadi on Saturday.

The UN chief was referring to the country's minority Sunnis who say they were marginalised under the Shi'ite-led government installed after the US-led invasion in 2003 and some of whom have joined the militant group which seized swathes of Iraq nearly two years ago.

World Bank President Jim Young Kim and president of the Islamic Development Bank Ahmad Mohamed Ali joined Ban in the rare visit to Iraq's capital and were expected to accompany him to the northern Kurdish city of Erbil later in the day.

Ali said the bank would contribute to the reconstruction of areas destroyed in fighting between Islamic State and US-backed Iraqi forces seeking to recapture them.

The World Bank lent Iraq around $US2 billion ($A2.66 billion) last year for reconstruction, infrastructure, and emergency budget support to help it deal with the economic effects of the fight against Islamic State and the low price of oil, which accounts for around 90 per cent of government revenues.