The package includes loan guarantees from the UK for about $372 million, and from Canada for about $72 million.
"Despite an ongoing war and low oil prices, Iraq is undertaking bold transformational reforms that will safeguard economic stability and lay the foundations for longer term private sector development and inclusive growth for all Iraqis," said Ferid Belhaj, World Bank director for the Middle East.
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The reforms also will help to expand social safety nets "to reach the most vulnerable segments of the population," he said in a statement.
The bank also approved $41.5 million for a program to improve management of the country's public funds.
With the new package, the World Bank engagement in Iraq rises to nearly $3.4 billion, including support for reconstruction of areas recently recovered by government forces and a transport corridor investment.