Administrator’s Weekly Report Economy — establish Baghdad Stock Exchange; Restructure National Debt — 28 حزيران 2004

Administrator’s Weekly Report Economy June 19 — June 28, 2004 HIGHLIGHTS On June 28, Iraqi sovereignty was established in a ceremony between officials of the Coalition Provisional Authority and the Iraqi Interim Government. This is the last Administrator’s Weekly Report on the Economy published by the Coalition Provisional Authority of Baghdad. Future updates on the status of Iraq reconstruction will be published by the U.S. Embassy in Baghdad. The Iraq Stock Exchange opened on June 24 for the first time since the fall of the Ba’athist regime. The mid-market loan program has been launched with the creation of Iraq Mid-Market Development Foundation, a separate legal entity that will channel $140 million of medium term loans to Iraqi companies and banks. As of June 22, 2004, estimated crude oil export revenue reached $7.7 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 The Iraq Stock Exchange opened on June 24 for the first time since the fall of the Ba’athist regime. During the two-hour session, 51 trades were executed in 589,711,002 shares of six companies for a total dollar amount of $2.5 million. During the next trading session later this week, 15 more companies are expected to be admitted for trading, with more admitted each week until all the 114 companies listed are free to trade. For comparison, the first day of trading on the Baghdad Stock Exchange in 1991 saw only 53,000 shares traded. At the New Iraqi Dinar (NID) auction on June 27, the settlement price was 1,460 dinars per dollar, the same as the previous day, and unchanged from a week ago. The amount of dollars sold at the auction varied over the week from $8.2 - $14.5 million. New Iraqi Dinar monthly fluctuation: March 24 – April 15: NID depreciated 2.2 percent April 24 – May 24: NID depreciated 1.7 percent May 24 – June 24: NID appreciated 0.3 percent Source: CPA Senior Advisor to the Central Bank of Iraq The annualized weekly volatility of the New Iraqi Dinar this past week was 0.36 percent. II. DEVELOP TRANSPARENT BUDGETING AND ACCOUNTING ARRANGEMENTS Redrafting and Execution of 2004 Budget As of June 24, the balance in the Development Fund for Iraq (DFI) was $7.6 billion, comprised of $6.5 billion in the original Federal Reserve Bank of New York (FRBNY) account, and $1.1 billion on deposit in DFI-Baghdad. Of this, $4.6 billion is already committed to projects, and the remaining $3.0 billion is slated for projected 2004 budget items. Since establishment, the DFI investment program at FRBNY has earned $41.534.1 million in interest. As of June 24, the total payments out of the DFI amounted to $13.1 billion. 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 June 23 $9.0 billion are committed to Iraq relief and reconstruction efforts, 87 percent of the July 1 goal. As of June 23, $5.3 billion of funds are obligated with contractors. The following shows the money committed by sector as of June 24 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. DESIGN OIL TRUST FUND Proposal for Oil Trust Fund As of June 22, 2004, estimated crude oil export revenue reached $7.7 billion for 2004 (crude oil export revenue for 2003 [June - December] was $5.1 billion). IV. LAY FOUNDATIONS FOR AN OPEN ECONOMY Provide IG Staff Capability; Trade Bank; WTO Observer Status; Develop Framework for Collateralizing Movable and Immovable Property Since December 2003, the Operating Consortium on behalf of Trade Bank of Iraq has issued 261 letters of credit totaling $1.1 billion, financing imports from 45 countries. 221 of those letters of credit remain outstanding, for a total of $758.4 million. 154 letters of credit, totaling $611.2 million, are pending issuance with JP Morgan. The mid-market loan program has been launched with the creation of Iraq Mid-Market Development Foundation, a separate legal entity that will channel $140 million of medium term loans to mid-sized Iraqi companies and banks. Funded by CPA and Overseas Private Investment Corporation, the loan foundation is hiring an expatriate CEO to manage the loans. Private Sector Development has interviewed more than 50 Iraqi companies to fill the pipeline of loan applications. Loans will range in size from $500,000 to $5 million and will be available to qualified businesses to purchase new plant and equipment, expand distribution, hire new staff, and fund other growth projects. On June 27, Ambassador Bremer, with approval of the Prime Minister, directed an additional $11 million dollars be allocated to help standup and train the 28 Offices of Inspector General. The money will be held in the Prime Minister's central budget and apportioned to Ministries based previously submitted assessment by their respective Inspectors General. V. PURSUE NATIONAL STRATEGY FOR HUMAN RESOURCES DEVELOPMENT Begin to employ workers in Public Works programs around the country Ongoing security problems are still creating gaps in employment reporting. The following is a list of Iraqis employed in various sectors and projects: Security/national defense employs: 251,847 Governorate teams employ: 1,550 PMO Supplemental and Accelerated Iraqi Reconstruction Projects employ: 11,784 PAGE PAGE 4 FOUO Prepared by the Information Management Unit PAGE 1 FOUO Prepared by the Information Management Unit