Ec o n o my

18 Ec o n o my Reforms Pave the Way for Growth Iraqi GNP peaked the year Saddam Hussein came to power. By the time he invaded Kuwait, it had dropped by over 80%. my was shattered by war, corruption, and heavy centralization. Over the During Saddam’s reign, Iraq’s econo- past year, U.S. assistance supported reforms that stimulate international trade and generate employment. Iraq is ap- plying the economic reform lessons learned in the early 1990s from the former Soviet Union and Eastern Europe, including: ● Reactivating food production and markets; ● Involving the private sector early on; ● Linking economic development with demo- cratic governance, and ● Ensuring transparency in government fi- nance and procurements. U.S. experts in economic management helped Iraqi ministries examine and reform laws, regulations, and institutions, and they provided a framework for private sector trade, commerce, and investment. These have strengthened the Central Bank and the key ministries of Finance, Trade, Commerce, and Industry. Technical support from the U.S. con- tractor BearingPoint has helped to start and expand small and medium enterprises. Aid also strengthened the regulatory framework and economic governance of telecommunica- tions, power, and other utilities. To date, the CPA has made more than 1,800 loans available, with amounts up to $5,000 for micro-enterprises and $25,000 for small businesses. USAID technical assistance helped ensure a repayment rate of nearly 100 percent. Fifteen percent of the clients are fe- male. These economic reforms are generating jobs and can be expected to generate even more in the future, both in cities and on farms. As they take hold, they should attract Results ● Launched new currency. ● Created more than 77,000 public works jobs for Iraqis. ● Helped set up a new sys- tem that allows 80 banks to send and receive pay- ment instructions. ● Worked with Iraqi Trea- sury to finalize year-end financial statements of Iraq’s two largest banks- the state-owned Rasheed and Rafidain, so that they met international ac- counting standards. ● Helped train staff to use a new accounting and financial reporting system. It will be used by all Iraqi treasury of- fices and ministries. ● Updated commercial laws for private sector and foreign investment; helpd develop the new company law. ● Worked with the CPA and UK Customs Service to design the recon- struction levy which im- poses a five percent tar- iff on Iraqi imports. donor and private investment as well as pro- viding the conditions for a revived private sector to flourish. Transformation of the Iraqi economy will be one of the lasting benefits of the post-war reconstruction. Iraq Gross Domestic Product Thomas Hartwell per person $4,500 1980 Saddam invades Iran $4,000 $3,500 $3,000 1990 Saddam invades Kuwait $2,500 $2,000 1996 UN oil for food program begins $1,500 $1,000 $500 Iraq’s old currency was re- placed January 15. The ex- change put 4.62 trillion new dinars into circulation and destroyed the old cur- rency with Saddam Hus- sein’s photo on the bills. The new dinar appreciated from 2,000 per U.S. dollar to 1,300 during the course of the con- version. $0 ‘80 ‘82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 Source: Economist Intelligence Unit