Administrator’s Weekly Report Economy

Administrator’s Weekly Report Economy April 10-April 16, 2004 HIGHLIGHTS As of April 16, 2004, estimated crude oil export revenue reached $5.7 billion for 2004 (crude oil export revenue for 2003 [June - December] was $5.1 billion). I. BUILD FINANCIAL MARKET STRUCTURES Modernize the Central Bank; Commercial Banking System; Re-establish Baghdad Stock Exchange; Restructure National Debt At the New Iraqi Dinar (NID) auction on April 15, the settlement price was 1,445 dinars per dollar, the same as the previous day, but down 1.46 percent from a week ago. The value of dollars sold at the auction varied over the week from $6.1 - $21.3 million. New Iraqi Dinar monthly fluctuation: January 13 – February 13: NID appreciated 6.6 percent February 14 – March 14: NID appreciated 0.7 percent March 15 – April 15: NID depreciated 2.1 percent Source: CPA Senior Advisor to the Central Bank of Iraq The annualized weekly volatility of the New Iraqi Dinar this past week was 3.56 percent. II. DEVELOP TRANSPARENT BUDGETING AND ACCOUNTING ARRANGEMENTS Redrafting and Execution of 2004 Budget As of April 16, the balance in the Development Fund for Iraq (DFI) was $9.97 billion, comprised of $8.97 billion in the original Federal Reserve Bank of New York (FRBNY) account, and $1.0 billion on deposit in DFI-Baghdad. Of this, $3.7 billion is already committed to projects, and the remaining $6.2 billion is slated for projected 2004 budget items. Since establishment, the DFI investment program at FRBNY earned $18.6 million in interest. As of April 16, the total payments out of the DFI amounted to $6.7 billion. State Department and U.S. Agency for International Development (USAID) assistance to Iraq disbursed in FY 2003/2004 totals $3.7 billion as of April 13, 2004: USAID/Asia and Near East (ANE): $2.6 billion USAID/Office of Foreign Disaster Assistance (OFDA): $101 million USAID/Food for Peace (FFP): $426 million USAID/Office of Transition Initiatives (OTI): $161 million State Department/ Bureau of Population, Refugees, and Migration (PRM): $39 million The Program Management Office (PMO) intends to commit $10.4 billion (56 percent of the $18.4 billion supplemental) toward contracts by July 1, 2004. As of April 15, $4.8 billion are committed to Iraq relief and reconstruction efforts, 46 percent of the July 1 goal. As of last week, $2.56 billion of funds are obligated with contractors (25 percent of the committed fund’s goal). The following shows the money committed by sector as of April 15 against the July 1 target. Source: Program Management Office Section 2207 of the Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan, FY 2004 (Public Law 108-106) enumerates the allotments granted to CPA for each sector and levies a quarterly reporting requirement to Congress detailing PMO’s spending. III. PRIVATE SECTOR INITIATIVES Streamline existing commercial code/regulations; Facilitate lending to private businesses; Technical Assistance for Small and Medium Enterprises (SMEs); Iraqi Participation in Reconstruction Subcontracts; Business Development The Ministry of Trade began approving applications for branches of foreign companies. To date, more than 1,800 loans totaling $3.5 million have been disbursed to micro and small enterprises throughout Iraq. The loans range from $100 to $5,000 for micro-enterprises and $5,001 to $25,000 for small enterprises. The average loan size is $1,944 with a repayment rate of 100 percent. Approximately 15 percent of the program’s clients are women. In an effort to increase the diversity of its clients, ACDI/VOCA (USAID’s implementing partner) recently designated several loan offices to specialize in group lending techniques for women and another group of loan officers to investigate an agricultural lending program. IV. DESIGN OIL TRUST FUND Proposal for Oil Trust Fund As of April 16, 2004, estimated crude oil export revenue reached $5.7 billion for 2004 (crude oil export revenue for 2003 [June - December] was $5.1 billion). V. LAY FOUNDATIONS FOR AN OPEN ECONOMY Provide IG Staff Capability; Trade Bank; WTO Observer Status; Draft Intellectual Property law to IGC by April 15, 2004; Develop Framework for Collateralizing Movable and Immovable Property Since opening in December, the Trade Bank of Iraq has 183 Letters of Credit issued or pending issuance totaling $708.9 million in imports from thirty one countries. This includes one letter of credit pending issuance with a guaranty from the Export-Import Bank of the United States and twenty one letters of credit pending issuance under the Oil for Food program. CPA is close to initiating field work on a year-long National Economic Survey of Iraq. The survey, using 20 or more Iraqi economists, will study a number of priority economic sectors to formulate a picture of how each sector works, its relationships with other sectors, and how it contributes to the national economy. Project staff will also use secondary data available from the Iraqi government and CPA offices. Two project economists are near to completing a sector outline and questionnaire for agriculture which will be the first sector surveyed. CPA is holding discussions with the Ministry of Planning and the World Bank to explore possible collaboration. Project bids are due April 25 and CPA plans to complete the contract and commence field work by mid-May. The National Economic Survey project team is exploring the possibility of forming an independent economic policy institute. In addition to being a possible vehicle for conducting the National Economic Survey project, such an institute could perform the functions of a Western think tank including formulating policy recommendations, holding seminars, publishing reports and acting as counterbalance to the government’s economic policy-making. VI. PURSUE NATIONAL STRATEGY FOR HUMAN RESOURCES DEVELOPMENT Begin to employ workers in Public Works programs around the country Ongoing security problems have reduced the reliability of data on Iraqi employment by CPA and CJTF-7 this week. Where data is available, it indicates a small decline in the jobs identified as created by CPA/CF. However, until the employment numbers are confirmed in official reports, no new employment figures will be reported. Ministry of Labor and Social Affairs has 16 Employment Centers up and running across the country. Three more are scheduled to open over the next few weeks. Over 54,000 jobseekers have registered in the Baghdad Center since its opening in late 2003. In March, nearly 500 jobseekers were placed in jobs in Baghdad alone. In addition to ongoing English and computer courses, last week the Employment Center began teaching Arabic literacy courses to registered jobseekers. English, computers and literacy courses will soon be expanded to Basra, Arbil, and Sulaymaniyah Employment Centers. PAGE PAGE 4 FOUO Prepared by the Information Management Unit PAGE 1 FOUO Prepared by the Information Management Unit