James Wolfensohn said on Wednesday that $40 billion of the debt was owed to the Paris Club and at least $80 billion more was due to other countries.
The Paris Club is a grouping of creditor governments who regularly meet in Paris to discuss bilateral official debt of nations around the world. It also helps them with restructuring that debt or lending money to them.
The former Yugoslavia was given a two-third debt write-off after Slobodan Milosevic was ousted and Iraq would need at least the same, Wolfensohn said.
"It will need to be at least that to give the country a real chance of getting back to equilibrium, so I think a target of something north of two-thirds will be what people will be looking at," he told the National Press Club in Washington.
Heavily indebted nation
Last month the Group of Seven wealthy nations said they wanted to reach a deal by the end of 2004 on Iraq's debt.
"The (Madrid) meeting from a financial point of view was quite successful... but there remain the overriding questions of security and the future transference of power"
World Bank president
Wolfensohn said the $13 billion in aid pledged at an international donor meeting in Madrid last week for Iraq's reconstruction, was a "good start" and another donors' meeting may follow.
The United States has proposed $20 billion for Iraq's reconstruction, part of a larger $87 billion that Washington wants approved by Congress for military spending in Iraq and Afghanistan.
"The meeting from a financial point of view was quite successful, the interest was considerable but there remain the overriding questions of security and the future transference of power," Wolfensohn said of the Madrid meeting.
He said Iraqi aid should be given in grants instead of loans to avoid burdening the country with more debt. It is already the world's most heavily indebted country in terms of per capita gross domestic product.