The pledge, announced by Economy Minister, Rodrigo Rato, on Friday, breaks down into three parts.
About $210 million will be in direct grants, while $75 million will come in the form of "concessional loans", which tend to be partially forgiven
A further $15 million will be assigned to Spanish companies that will perform studies on projects to be realised with the Spanish grants and loans, Rato said.
Of the total, about $160 million would be distributed in 2003 and 2004 and $140 million from 2005 to 2007.
"The Spanish government, upon studying...the weight of our country in the world economy, which is about two percent ... has decided to contribute $300 million," Rato told a news conference. He was speaking before an international donors’ conference to take place in Madrid next Thursday and Friday.
"Moreover, it is a figure that is compatible with and comparable with what we have done in Bosnia or Afghanistan," Rato said.
More pledges to come
About 75 countries and international organisations will make formal pledges of aid for Iraqi reconstruction at the Madrid conference.
According to US figures $87
billion is needed to rebuild Iraq
Earlier on Friday in Brussels, Prime Minister Jose Maria Aznar was at pains to point out that Spain's contribution – worth about 258 million euros ($299.5 million) – was greater than the 200 million euros pledged by the European Union as a whole.
Spain firmly backed the United States on the Iraq war and currently has about 1300 troops deployed in the country.
As host of the conference, Spain's promise of aid contrasts with the positions of war opponents Russia, France and Germany.
Greater role for UN
While supporting Thursday's US-drafted UN Security Council resolution on Iraq, those three powers withheld pledges for further aid because they seek a greater role for the United Nations in Iraq and a speedier transfer of power to Iraqis.
The United States and international organisations have identified a total of $56 billion needed for Iraqi reconstruction through 2007.
US President George Bush has proposed spending $20 billion for reconstruction – part of an $87 billion package of mostly military expenses – although the US Senate on Thursday voted to convert half of the $20 billion into a loan.
Japan has pledged about $1.5 billion, Britain about £550 million ($919 million) and the European Union 200 million euros ($232 million).