Administrator’s Weekly Report Economy

Administrator’s Weekly Report Economy May l -May 7, 2004 HIGHLIGHTS As of May 4, 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 On May 5 the members of the Private Bankers of Iraq (PBI) conducted a special meeting to unanimously adopt a charter and elect a board of directors. The board of directors met after the special meeting and elected their chairman, deputy chairman and treasurer. The PBI is the first banking organization exclusively devoted to the interest of Iraq’s private banks. At the New Iraqi Dinar (NID) auction on May 6, the settlement price was 1,460 dinars per dollar, the same as the previous day, but down 0.69 percent from a week ago. The amount of dollars sold at the auction varied over the week from $4.0 - $14.3 million. New Iraqi Dinar monthly fluctuation: February 6 – March 6: NID depreciated 4.8 percent March 6 – April 6: No change April 6 – May 6: NID depreciated 2.6 percent Source: CPA Senior Advisor to the Central Bank of Iraq The annualized weekly volatility of the New Iraqi Dinar this past week was 1.00 percent. II. DEVELOP TRANSPARENT BUDGETING AND ACCOUNTING ARRANGEMENTS Redrafting and Execution of 2004 Budget As of May 6, the balance in the Development Fund for Iraq (DFI) was $10.2 billion, comprised of $9.3 billion in the original Federal Reserve Bank of New York (FRBNY) account, and $0.9 billion on deposit in DFI-Baghdad. Of this, $4.8 billion is already committed to projects, and the remaining $5.5 billion is slated for projected 2004 budget items. Since establishment, the DFI investment program at FRBNY earned $24 million in interest. As of April 30, the total payments out of the DFI amounted to $7.9 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 May 5, $6.6 billion are committed to Iraq relief and reconstruction efforts, 63 percent of the July 1 goal. As of May 5, $3.12 billion of funds are obligated with contractors (30 percent of the committed fund’s goal). The following shows the money committed by sector as of May 5 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 May 4, 2004, estimated crude oil export revenue reached $5.7 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; Draft Intellectual Property law to IGC by April 15, 2004; Develop Framework for Collateralizing Movable and Immovable Property Since opening in December 2003, the Trade Bank of Iraq has opened 202 letters of credit totaling $778.7 million, financing imports from thirty-two countries. Included is one letter of credit guaranteed by the Export-Import Bank of the United States for $6.9 million, twenty-eight letters of credit for $103.7 million pending issuance, and twenty-three letters of credit to be funded with Oil For Food funds pending issuance. The CPA advisors office for the Ministry of Trade (MOT) gave a presentation on the U.S. Generalized System of Preferences (GSP) to MOT Director General Al-Mukhtar and other Ministry officials. Daniel Ross, newly-arrived in the Advisors Office from USTR, explained the eligibility criteria for the program and how a country requests designation as a beneficiary of the program. MOT officials agreed to work with CPA advisors to request designation of Iraq as a beneficiary country and seeking expedited consideration of the request. The advisor’s office will also collaborate with MOT to draft a required report on Iraq’s compliance with GSP eligibility criteria. CPA Administrator L. Paul Bremer III signed CPA Order 83, the Amendment to the Copyright Law. The Order revises and amends existing Iraqi Copyright Law to provide for its modernization and to provide increased protections for writers, computer software engineers, performers, producers of sound recordings, and others who create or own literary and artistic works. The Order brings the current Iraqi Copyright Law into accordance with internationally-recognized standards of protection. As part of the preliminary stages of Iraq’s WTO accession process, on May 5, the CPA Office of the General Counsel briefed the Iraqi Ministry of Trade senior leadership on how implementation and enforcement of CPA Orders 80, 81 and 83 (Trademarks and Geographical Indications; Patents, Industrial Designs, Undisclosed Information, Integrated Circuits and Plant Varieties; and Copyrights, respectively) would help Iraq meet its obligations under the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). As a result, Ministry officials have requested that the Office of General Counsel organize technical assistance programs for Ministry of Trade officials. Future training programs are also being planned for officials of the Patent and Trademark Offices. V. 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. VI. INITIATE PUBLIC SECTOR MANAGEMENT REFORM Civil Service Salary Review The Inspector General for the Ministry of Defense was appointed this week. With this appointment, all 26 Ministries have Inspector General. On May 4, newly appointed Inspectors Generals met at the Baghdad Convention Center to review staffing, training plans, staff pay, ethics and the code of conduct program, and the 2005 Inspector General budget. The Inspectors General are meeting together weekly basis to discuss common issues (particularly budget staff) and develop their individual and collective roles. PAGE PAGE 2 FOUO Prepared by the Information Management Unit PAGE 1 FOUO Prepared by the Information Management Unit