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Measuring Stability and Security in Iraq


June 2008
Report to Congress
In accordance with the
Department of Defense Appropriations Act 2008
(Section 9010, Public Law 109-289)

 


Section 1-Stability and Security

1.2 Economic Activity

During this reporting period, the GoI’s ability to spend its resources, provide essential services and promote economic development showed marginal improvement. Complex budgetary funding processes and the lack of contracting capacity continue to hamper budget execution. Budget execution rates continue to be relatively low, limiting Iraq’s ability to increase economic development and deliver essential services to its citizens. Electricity production increased 26% between January and April 2008, a significant recovery from the decline in mid-January 2008. Likewise, Iraq is producing and exporting oil at higher levels compared to 2007, which—together with markedly higher world oil prices—has resulted in significantly increased revenues for the Iraqi Government.

Budget Execution

The initial Ministry of Finance (MoF) report on capital spending through December 31, 2007, indicates $7.2 billion of the $10 billion capital budget, or 72%, has been spent or committed. The MoF is still making final year-end adjustments and processing closeout execution numbers, so these figures may be somewhat unreliable. The GoI’s ability to execute its capital budget remains significantly hampered by a reported lack of capacity in the spending units and cumbersome budgetary approval and complex funding processes. Despite these difficulties, the overall progress towards capital expenditure in 2007 was positive. For example, the GoI significantly improved its ability to spend Iraqi money on reconstruction needs.

Overall, the GoI has executed $4.8 billion of the $6.2 billion allocated by the Finance Ministry for the ministerial capital budget through December 31, 2007 (excluding the KRG). Total ministerial performance is heavily dependent upon activity with the Ministries of Oil (MoO) and Electricity (MoE), as they comprise a significant portion of the capital budget (57%). The MoO executed $1.1 billion of its $2.2 billion 2007 capital budget.

The MoE executed $594 million of its $1.4 billion capital budget. These low execution rates are driven by the nature of the projects for these ministries, which typically require multiyear, large-scale strategic infrastructure upgrades. Since most of the contractual expertise in these areas lies with global firms that have been reluctant engage in long-term projects with the GoI, budget execution is likely to remain below 100%.

Provincial governments spent only $870 million of their $2.3 billion adjusted capital budget allocation through December 31, 2007.5 This is partly due to last year’s requirement for High Contracts Committee (HCC) approval for projects of more than $5 million. In addition, contracting regulations required local contractor solicitations before broadening the scope of advertisement nationwide. In 2008, spending authority was increased to $10 million, and the HCC was replaced by the Central Contracts Committee, a new approving authority designed to be more responsive to requests for approval. However, bureaucratic impediments, combined with a limited availability of resident contractors, continue to slow progress and increase the number of weeks required to sign a contract.

The Iraqi Government has taken steps to give the ministries and provinces more time to spend their capital budgets because of difficulties with budget execution. The 2008 Iraqi Budget Law allows the provinces and the ministries to roll over their prior year allocations into the current budget year accounts to provide them more time. In addition, the Council of Ministers has also decreed two new GoI procurement guidelines in early 2008 designed to facilitate procurement and expedite budget execution. The first measure streamlines the letter of credit approval process while the second raises spending authorities for ministries and provinces, which increases their contracting autonomy.

The U.S. continues to provide technical assistance to help the GoI improve budget execution. The Embassy has established formalized training for GoI ministerial and provincial officials in the form of three-to fiveday, “Investment Budget Execution Workshops.” The four workshops held to date have generated positive feedback and requests for more training. The Department of Treasury is working to develop additional workshops.

2008 Iraqi Budget

During this reporting period, the Iraqi budget bill debate evolved from a debate over economic terms to a debate over political terms, as different groups attempted to enhance their relative share of Iraq’s oil wealth. The main points of contention were the percentage of funding for the KRG (a 17% allocation for the KRG was part of the approved legislation), funding for the Peshmerga and a Board of Supreme Audit review of KRG revenues that could result in an offset against 2008 transfers. The CoR gained approval of the draft budget in mid-February 2008 and published it in the Official Gazette in late March 2008.

Projected revenues for 2008 are $54.5 billion based on oil sales of 1.8 million barrels per day (mbbl/d) at export prices of $83 per barrel. Expenses are budgeted at $49.9 billion, leading to a projected surplus of $4.6 billion. With higher prices per barrel and increased deliveries from the Northern Pipeline for the first four months of the year, the GoI is now projecting a growing budget surplus relative to currently planned expenditures and has requested that ministries and provinces submit requests for supplemental budget allocations.

The 2008 budgeted expenditures of $49.9 billion represent a 22% increase over 2007’s $41.1 billion budget. The 2008 capital budget of $13.1 billion is a 31% increase over 2007’s $10.1 billion budget. Provincial capital funding increased 57%, to $3.3 billion in 2008. Total transfers to the KRG center and the three provinces increased 17% to $5.5 billion in 2008. The 2008 security budget increased to $9 billion ($3.9 billion budgeted for the Ministry of Interior and $5.1 billion for the Ministry of Defense), which is a 23% increase over 2007. U.S. Government officials will continue to work with Iraqi leaders on allocating a greater portion of surplus revenues to offset U.S. expenditures, make strategic investments that will yield sustainable economic growth and fulfill debt repayments scheduled for 2009 to stimulate further debt forgiveness.

IMF Stand-By Arrangement and Debt Relief

The International Monetary Fund (IMF) Stand- By Arrangement (SBA) provides a framework for economic reforms in areas such as fiscal and monetary policy and financial sector development. In December 2007, the IMF commended Iraq for its implementation of the reforms required by the previous SBA. It also approved a new SBA for Iraq, which is valid through March 2009. The new SBA calls for crucial reforms in areas such as public financial management, strengthening the Central Bank of Iraq, bank restructuring and subsidy reform. Iraq is on track to meet the SBA criteria and benchmarks before the program ends in March 2009.

In November 2004, the Paris Club agreed to provide 80% debt relief to Iraq in three tranches. All Paris Club creditors have now concluded debt relief agreements with Iraq, representing $42.3 billion in debt relief. Iraq will receive the third and final tranche ($7.5 billion) of debt relief following three years of satisfactory performance on IMF SBAs. The Paris Club requires that Iraq seek at least comparable treatment from all of its creditors. Russia signed its bilateral debt relief agreement with Iraq on February 11, 2008. Iraq’s neighbors and China are its largest remaining creditors. Saudi Arabia publicly announced a commitment to provide debt relief to Iraq, although it has yet to fulfill this pledge. Iraq is studying options to address claims from bilateral creditors that do not sign debt relief agreements by the end of 2008. To date, Iraq has received $8.2 billion in debt relief from non-Paris Club bilateral creditors and $19.7 billion in commercial debt relief. Iraq’s estimated remaining bilateral debt (including that owed to Paris Club members) is between $56 billion and $80 billion.

Indicators of Economic Activity

Economic Growth

The Iraqi economy grew 4.1% in real terms in 2007 according to Iraq’s Central Organization for Statistics and Information Technology (COSIT). COSIT projects the Iraqi economy will grow 7% in real terms for 2008. It also estimates a nominal gross domestic product (GDP) of $60.9 billion. Oil export revenue increases between 9%-10% should drive growth, while the non-oil sector (accounting for approximately one-third of GDP) is likely to grow at 3%.

Inflation

Inflation rate continues to be lower. Core inflation (which excludes fuel and electricity charges and transportation and communications prices) was 12% in 2007, compared to 32% in 2006, according to COSIT. This was due to the combination of an improving security environment in the second half of 2007, as well as tight monetary policy throughout 2007. From November 2006 through the end of April 2008, the dinar appreciated against the U.S. dollar by 23%. These lower inflation rates improved Iraqi purchasing power for basic needs and provided a more stable environment in which the private sector could grow. The Central Bank of Iraq (CBI) has begun to cautiously loosen monetary policy in response to lower rates of inflation by decreasing the interest rate from 20% to 19% in February 2008, and again to 17% in March 2008.

Unemployment

Unemployment and underemployment continue to be major challenges. COSIT has not recently updated its official estimates of unemployment and underemployment of 17.6% and 38.1% respectively. Attempts to measure unemployment by other means at the provincial levels suggest that the rate lies between 30% and 50% in some areas. Without a reliable collection method, it is difficult to determine the actual level of unemployment; however, there is a clear lack of employment opportunity for skilled and unskilled labor throughout the country.

The Iraqi First Program seeks to increase economic development throughout Iraq. The U.S. Government designed this purchasing program to encourage Iraqi economic expansion, entrepreneurship and business development by removing barriers that prevent Iraqiowned businesses from competing against larger, international companies for U.S. Government contracts. Since it began in March 2006, the Iraqi First Program has awarded over $6 billion in contract business to Iraqi companies. Joint Contracting Command Iraq/Afghanistan (JCC-I/A) awarded more than $2.1 billion worth of contracts to the Iraqi business community in FY 2007, generating approximately 69,000 Iraqi jobs. The Logistics Civil Augmentation Program supports the Iraqi First Program by assisting Iraqi companies with the organizational processes necessary to compete for contracting opportunities.

The Department of Defense (DoD) Task Force to Improve Business and Stability Operations- Iraq (TF-BSO) continues to find success in business and economic development opportunities in Iraq. The TF-BSO estimates that over 100,000 sustained manufacturing and professional jobs have been established or restored through TF-BSO efforts in support of MNF-I commands. Since establishment of the TFBSO in June 2006, 53 state-owned factory operations have either restarted or have had production significantly increase due to TFBSO efforts. Of the 30 international corporations hosted in Iraq by the TF-BSO since January 2007, over half have transacted business or submitted proposals for business development. Working in partnership with the JCC-I/A, since 2006, over 3,900 private Iraqi businesses have been awarded DoD contracts worth over $1 billion that would have otherwise gone to non-Iraqi companies in the region. For example, the GoI recently awarded international investors a license to build a 250- 300 room luxury hotel in Baghdad’s International Zone, a project facilitated by TF-BSO. On May 5, 2008, Iraq signed two contracts worth $5 billion to buy 40 Boeing and 10 Bombardier aircraft to upgrade the Iraqi Airways’ aging fleet. The contractors will deliver the first Boeing plane in 2013.

Banking Sector

Iraq does not have a fully developed banking infrastructure. Recent reforms in the banking sector focus on establishing a nationwide electronic payments system, expansion of the private banking sector and restructuring of the state owned banks. As of May 2008, the banking sector consisted of 39 banks. Seven banks are state-owned, 22 are private banks, six are Islamic banks and four banks and branches are foreign-owned.

On January 28, 2008, a fire destroyed the headquarters office of the CBI. The CBI immediately restarted many of its operational activities, although its facilities are severely impaired. Despite adverse conditions, the CBI continues to conduct monetary policy implementation through the Foreign Currency Auction, sale of bills, management of reserve requirements and offering deposit and loan facilities. Currently, the CBI has five of six branches open.

While the number of banks licensed is clear, there is considerable variation in the number of bank branches reported as open. According to the CBI, there were 755 private and state owned branches as of December 2007. Two state-owned commercial banks (Al Rasheed and Rafidain) own 90% of the assets in the banking system. The remaining state-owned banks are specialized public financial institutions that serve the agriculture, industry, real estate, trade and social sectors.

The TF-BSO has continued to help Iraq move away from being a cash-based economy toward modern, electronic banking practices. TF-BSO helped engineer a policy change through the JCC-I/A, which was implemented in October 2007 and has increased electronic payments on DoD contracts with Iraqi companies from 17% in July 2007 to over 76% in March 2008. The value of payments going directly to Iraqi banks for these Iraqi companies since the policy became effective has increased 15-fold. In order to continue migration to Electronic Funds Transfer (EFT), the TF-BSO also has established an EFT Assistance Center located in Baghdad. In addition, the TF-BSO has worked with Iraqi private banks to establish a retail payments consortium that is currently working to enable Iraq-wide use of debit and credit cards, ATMs and payments initiated from mobile phones linked to consumers’ bank accounts. This will significantly reduce the need to transport and carry cash. This infrastructure is scheduled to be operational in the summer of 2008, beginning with debit cards and mobile banking capabilities.

The Warka Bank is the largest private bank in Iraq and provides strong and growing banking services. Warka functions primarily as a retail bank, offering direct deposit services with domestic debit card capabilities, and as an investment bank participating in many investment sectors. The bank delivers services through a network of more than 60 branches covering all Iraqi governorates. There are 39 additional branches under construction throughout Iraq.

Oil Infrastructure

Iraq continues to produce and export oil at higher levels compared to 2007, although technical issues relating to wellhead equipment and field infrastructure needs will continue to cause intermittent reductions in field production. Production in May 2008 reached its highest level since September 2004, with an average daily production of 2.61 million barrels per day. Increased security is a major factor in production and export gains, as deterrents such as the Pipeline Exclusion Zones (PEZs) and increased oil security from the Oil Police, Sons of Iraq and the Iraqi Army have reduced the number of pipeline interdictions. Improved security allows repair teams access to address maintenance and corrosion problems and repair pipelines that have been out of use for years. The PEZ between Kirkuk and Bayji is scheduled to be complete by June 30, 2008. ITAO has already awarded the contract for the next PEZ between Bayji and Baghdad to protect pipelines that distribute refined products. The GoI plans to complete a third major PEZ between Baghdad and Karbala by October 2008. This renewed emphasis on basic infrastructure repairs and protection has improved the redundancy of the crude and refined product networks, resulting in greater availability of oil and gas.


The fighting in Basrah during March and April 2008 briefly affected southern exports and highlighted both positive and negative aspects of the current infrastructure. For example, workers repaired an interdicted line during this period within three days, demonstrating a remarkable improvement in repair capability. The interdicted line did not completely shut down exports but did result in a 33% reduction in exports. Although operations halted in some fields due to security issues, other fields were able to provide compensating output. While exports recovered quickly, concerns remain that the southern oil export infrastructure system lacks redundancy and has several potential single points of failure. In response, Iraq is pursuing avenues to avoid catastrophic failure in the southern export lines. One such initiative is the crude redundancy project, but this effort may take up to three years to complete. Planning and implementation of this project should be accelerated.

The Oil Ministry has made progress with other oil infrastructure projects not related to security. The repair of the hydrocracker at the Bayji Refinery and the training of personnel to operate it continue. Initial operations are planned for September 2008. The Siniyah Refinery has restarted and has received a constant flow of crude oil since late March 2008. The Haditha Refinery has been restored and is expected to become operational by the end of June 2008. Additionally, the expansion of the Daura Refinery continues with the construction of an additional processing unit that will add 70,000 barrels/day of production to the network.

Finally, major oil companies continue to operate in the Kirkuk and Rumaila Oil Fields and are expected to increase their operations as Technical Service Agreements (TSAs) are implemented. Disagreements over a payment mechanism may further delay implementation of the TSAs.

Agriculture

An efficient and productive agriculture sector is vital to Iraq’s economic, political and social stability. Agriculture already accounts for about 10% of GDP and 20-25% of the Iraqi labor force, making it the single largest source of employment and the second largest contributor to overall GDP in the country. The agriculture sector has the potential for expanding employment, including continued growth of more specialized and higher paying positions in processing and marketing. The abundance of Iraq’s natural resources relative to its neighbors, especially water, suggests strong potential for Iraqi agriculture in the global economy.

U.S. Department of Agriculture (USDA) personnel are working to build managerial capacity in the Ministry of Agriculture. Current animal husbandry initiatives in the poultry, cattle, sheep and fish sectors seek to develop labs to test and monitor infectious diseases, provide vaccinations, improve the hygienic slaughter of animals and enable the distribution of products to market. The USDA and the GoI have jointly developed soil analysis programs and agricultural extension services, which should improve seed and fertilizer inputs and optimize crop selection. The USDA and GoI are also prioritizing irrigation and drainage projects to reduce soil salinity and encourage a more efficient water distribution system. Other efforts include improving cross-ministerial planning between the Ministry of Water Resources and other ministries and the use of improved data collection and statistical analysis to support ministerial decision making. The USDA has representatives in each of the PRTs.

Inma, a $209 million USAID project launched in 2007, works with the GoI to support the development of agribusiness and agricultural markets to improve the livelihoods of farmers while energizing Iraq’s agriculture industry.6 Helping Iraqis transform local economies, Inma works with PRTs on the development of agribusinesses and value-added processing. Specifically, Inma completed projects that distributed feed grains in Anbar and developed a butchers association in Diyala. There are five projects currently underway, including a fall and winter planting of wheat and barley to expand the supply of quality seed to farmers in Anbar and Diyala. Another project concerns vegetable production in the region of Taji South, where the ePRT at Taji has worked to establish links to local markets. Inma is also developing a mushroom factory in Anbar and a fish farm in Babil.

Essential Services

In general, while the U.S. Government and the GoI completed several projects and large investments to improve delivery of many essential services, increased supply cannot keep up with demand. As the U.S. has wound down its large-scale infrastructure reconstruction programs, Iraq has significantly increased its spending on reconstruction projects as well as on the operation and maintenance of existing projects. Some Iraqis have seen progress in the delivery of essential services such as electricity, water and healthcare, though this varies by locale.

Electricity Infrastructure Integrity

The Iraqi Government is beginning to manage the energy sector more effectively, with the Prime Minister leading weekly coordination meetings with the Ministers of Oil and Electricity. The GoI made progress in streamlining capital investment and contracting processes, integrating oil and electricity sectors and approving special funding. Continued progress in the electrical sector faces a variety of challenges. Fuel shortages, reduced water levels at hydroelectric plants, interdictions, equipment failures, damage to key power line segments, reliance on foreign sources of power and years of system neglect exemplify these challenges. Although there is improved focus on an energy strategy within the Deputy Prime Minister’s office, development remains slow and continuing political engagement is necessary to make a smooth transition to a market-based industry model in which the government performs a regulatory function.

U.S. and early stage GoI investment continue to add electrical generating capacity to the Iraqi grid, resulting in increased electricity production since the summer of 2007. Electricity production for January through May 2008 was 10% greater than the same period in 2007, while the demand for the same period increased by 6%. The government met 50% of demand in February 2008. In March 2008, it met 62% of demand, the highest percentage in more than two years. However, this level still fluctuates, with supply meeting 58% of demand in April 2008 and 51% of demand through the end of May 2008.


Improved security has reduced the level of transmission line interdictions and has created the conditions that allow preventive maintenance to avoid disruptive failures. The 46 electrical towers from Baghdad to Diwaniyah and the 85 electrical towers from Baghdad to Mussayib have been hardened. This action will make critical distribution lines less vulnerable to attack and increase the reliability and ability of the grid to transmit electricity. Around the Baghdad ring, two of eight hardening projects are complete, and two of nine projects are complete along the northern transmission line. The remaining projects for both lines have scheduled completion dates of August 2008.

Electrical production increased by 14%, leading to a national average of 14.9 hours of power (HoP) between January and April 2008. On average, all provinces, with the exception of Irbil and Sulaymaniyah, received more than the goal of 12 hours of power (HoP) in April 2008. Increased electricity production resulted from increased imports of diesel fuel, preventative maintenance, higher grid reliability due to the reduced number of transmission line interdictions and the quick repair of damaged lines (damage due more to weather than hostile activity in March 2008). This increase in production directly affected the increase in average HoP nationwide.


Additional imports of electricity also contributed to the increased HoP. Turkish imports have resumed at contracted levels following GoI payment of bills. Iran has added a second transmission line to southern Iraq, and, as a result, imports from Iran have nearly doubled from their late-2007 levels to now account for two-thirds of total power imports. Imports of diesel from Kuwait (1.3 million liters per day), though not yet at contracted levels, have greatly increased since the last reporting period. These imports have resulted in additional generation at the Taji, Baghdad South and Qudas power plants. The additional diesel has also allowed the commissioning of new generators at Qudas and Mussayib.

Water and Sewer

Work continued on the Mosul Dam this quarter. The U.S. Army Corps of Engineers (USACE) Gulf Region Division (GRD) continues to work with ITAO to support the development and implementation of an enhanced grouting program, which provides new grouting equipment, procedures and materials. This quarter, the Ministry of Water Resources (MoWR) completed the first phase of laboratory testing of new grout mixes, with a second phase of testing currently underway. The MoWR also hosted a workshop to discuss a permanent solution to Mosul Dam’s foundation troubles. Overall, the Department of State, in coordination with the GoI, has allocated approximately $2.1 billion from the Iraq Relief and Reconstruction Fund (IRRF) for water and sewer infrastructure repairs, operations, maintenance programs and capacity development activities. As of April 2008, IRRF-funded projects had restored or added approximately 2.1 million cubic meters per day of treatment capacity, which is sufficient to serve 7.5 million Iraqis at a standard level of service. The U.S. Government has also completed water projects using Economic Support Funds (ESF) and Commander’s Emergency Response

Program (CERP) funds.

GRD is currently refurbishing the Sadr City R3 water treatment plant to increase the pressure and availability of water in that area. Current military operations in Sadr City have limited access of the contractor work force, slowing the project. GRD expects to begin providing a regular water supply to the distribution system within one month after workers are able to return to the site full-time. The plant will provide this initial water supply using the limited, temporarily repaired filters, while GRD makes permanent repairs to bring the plant to full capacity.

Healthcare

While the healthcare sector is improving, progress is hindered by inadequate communication, coordination and planning processes. Coalition efforts have focused on addressing these problems and expanding support to develop this sector. In April 2008, the Minister of Health signed a Memorandum of Understanding with USAID, underscoring a shared vision and collaborative effort to accelerate gains in health services delivery in the area of capacity development. In May 2008, the Minister of Health and a delegation comprised of medical and higher education professionals attended a Health Summit in Washington, D.C. focusing on developing a national health strategy. During his visit, the Minister also attended a meeting in Chicago organized by the Iraqi Medical Sciences Association, the Arab American Medical Society and the Center for International Rehabilitation entitled “Telemedicine Support for the Iraqi Health Sector.”

Efforts to improve the infrastructure of healthcare facilities include completing the construction of 101 of the 137 planned Primary Healthcare Centers (PHCs), with the remainder scheduled for completion by September 2008. The MoH now controls 88 of the completed 101 PHCs, and 72 are open to the public. The remaining 23 PHCs are not yet open due to a shortage of trained medical staff and security concerns. Seventeen of 25 hospital rehabilitation projects are complete, and the Ministry of Health successfully completed the procurement of a permanent electrical feed for the Basrah Children’s hospital.

The Ministries of Defense (MoD) and Health completed an agreement regarding MoD use of one of Baghdad’s hospitals. The agreement dedicates a wing of the hospital specifically for MoD patients, where MoD provides liaison officers to ensure the safety and security of the soldiers hospitalized there. Additionally, the MoH and MoD are working on a similar agreement in Basrah that would permit inpatient treatment of ISF patients while providing reliable security for healthcare professionals. The MoD will continue to rely on the MoH for healthcare assistance until the nationwide demand for medical staff decreases.

Transportation Network

The U.S. Government and the GoI recently formed a Transportation Fusion Cell to combine efforts to develop and integrate a comprehensive transportation infrastructure plan. The development, growth, repair and maintenance of the transportation network are vital to the economic stability and security of Iraq. An expanded transportation system plays an important political role by promoting regional integration and by heightening the central government’s presence in the more remote provinces. The GoI continues to embark on an ambitious transportation plan to simultaneously upgrade and extend road, rail, air and river transport.

The Iraq Transportation Network (ITN) is an Iraqi-led contracted management company made up of a consortium of tribally owned trucking companies. Initial operations began in May in Anbar with 80 trucks operating under a $3.5 million contract, which is expected to expand to $7 million over the next four months. If successful, the GoI could use this model throughout Iraq. In partnership with the Ministry of Transportation, the U.S. Government invested $97.9 million in state-of-the-art air traffic service infrastructure. The U.S. Air Force transferred control of the airspace above 29,000 ft in the middle of Iraq to the Baghdad Area Control Center. Aviation is the safest, fastest and most secure transportation mode in Iraq, with annual civilian growth exceeding 13%.

The Iraqi Republic Railway (IRR) provides positive economic benefit and a viable means of transporting people and goods for the GoI and Coalition forces. The IRR has established daily service from Baghdad to Basrah with over 15 stops along this rail line. In 2008, over 90 trains have carried approximately 7,000 passengers on this route with no interdictions. The IRR will complete a communication and control system project that will be connected by a digital microwave network in August 2008. This upgrade will increase the safety and dispatch rate of the IRR. Other efforts to improve the IRR are ongoing.

Conclusion

Despite considerable challenges, the Iraqi economy continues to grow, producing measurable signs of economic progress. Most notably, improved security in the North has enabled the production and export of crude oil to increase significantly since last August, while the South has maintained production levels consistent with previous years. However, further significant increases of oil production in either the North or South will require extensive investment in infrastructure and technical support. The GoI has yet to develop a national energy strategy to guide this complex effort. Access to capital is improving. Capital budget execution in 2007 improved, and expectations for 2008 remain positive. Iraq is poised to receive the final $7.5 billion tranche of debt relief from Paris Club creditors if it maintains satisfactory performance on the IMF SBA through the end of 2008. The GoI must continue to implement economic reforms and improve its government ministries in order to support continued economic growth, improve delivery of essential services and stimulate investments in its oil and electrical sectors. These reforms are essential to attracting foreign investment and developing a robust private sector that are important to a self-sustaining economy and long-term growth.



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