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UN Office for the Coordination of Humanitarian Affairs

IRAQ: International analysts call for transparent budgeting

ANKARA, 16 April 2004 (IRIN) - International analysts have renewed calls for transparency in the Iraqi budget after a report issued by Iraq Revenue Watch (IRW), an international financial watchdog organisation commenting on the Coalition Provisional Authority's (CPA) handling of Iraqi finances.

"There should be a revolution in the CPA's attitude towards financial transparency, because there is hardly any transparency at all," Toby Dodge, senior research fellow as Warwick University in the UK, told IRIN from Britain. He asserted that the CPA should make a point of having more international oversight and also facilitate press access to information about the budget.

For Reinoud Leenders, research analyst with the International Crisis Group (ICG), "the entire economic reconstruction process has not been transparent" and, as a result, he said many Iraqis did not feel a part of the process and have started to criticise it.

"There is a perception of an undemocratic, intransparent and corrupted governance. That's why the people don't feel a part of the process of economic reconstruction," he told IRIN from the Lebanese capital, Beirut.

Their comments follow the publication of the IRW report entitled: "Opening the books: Transparent Budgeting for Iraq", which asks for the CPA and the Iraqi Governing Council (IGC) to make further improvements in accordance with the standards of transparency and accountability before a new Iraqi government is established in 2005.

In order to encourage transparent budgeting, the CPA argues that it is supporting a 'Programme Review Board' to study different requests on how to spend Iraqi funds and to make recommendations to the administrator.

The CPA and Iraq's ministries of finance and planning jointly produced Iraq's 2004 budget, the first full-year financial plan since the fall of Saddam Hussein's regime in April 2003.

Funding for the budget comes from the Development Fund for Iraq (DFI), which contains US $1 billion transferred from the Oil-for-Food programme and is administrated by the CPA in consultation with the IGC in accordance with UN resolution 1483. The budget will also be financed by Iraqi funds that previously belonged to Saddam's regime and with money recovered from his government coffers.

According to IRW, the budget, which estimates a deficit for 2004 of US$ 590.9 million to be financed by refunds of Oil-for-Food funds, lacks key information about state-owned enterprises, financing for sub-national governments, and contingency planning that pose significant risks to Iraq's public purse.

IRW maintains that a contingency plan is crucial in the event that oil prices fall or exports are disrupted, hostilities continue, or foreign aid fails to materialise.

"The whole occupation will succeed or fail on its ability to build institutions that are sustainable, but also on its ability to have the support of the Iraqi population and for this contingency and transparency are important," Dodge stressed.

Leenders explained that before developing a contingency plan, there was an urgent need to establish some rules of law. "Iraq was a country in war where corruption and mafia style of business are emerging on the political sphere."

However, the CPA has made statements expressing its will to open Iraqi institutions to the public in order to "reduce corruption and strengthen the confidence of investors and the people of Iraq."

IRW also made other recommendations in its report such as the need for creating donor-supported NGOs to analyse and disseminate budget information. "A clear statement of the financial status of the Development Fund for Iraq should be covered in the budget document, including projected receipts and expenses, major categories of uses, and large contracts to be signed," the report asserted.

Theme(s): (IRIN) Conflict, (IRIN) Economy

[ENDS]

This material comes to you via IRIN, a UN humanitarian information unit, but may not necessarily reflect the views of the United Nations or its agencies. If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer. Quotations or extracts should include attribution to the original sources. All materials copyright © UN Office for the Coordination of Humanitarian Affairs 2004