Iraq: Financial Management

According to its constitution, the state of Iraq is charged with steering the economic in order to establish the socialist system and realize Arab economic unity. Paying taxes is the duty of every citizen. The Revolutionary Command Council (RCC) ratifies the general state budget and its final accounts.

Iraq's total external debt stood at $53 billion in 2000. The Economist Intelligence Unit estimates that GDP was $13.3 billion in 1999 and that per capita GDP rose from a low of $510 in 1997 to $1150 in 2000.

Public Audit:

The Central Bank of Iraq (Bank al-Markazi al-Iraqi) is formally in charge of the country's monetary policy but from 1994 to 1999 Iraq’s weighted average annual rate of inflation was 146 per cent. The Economist Intelligence Unit estimates consumer price inflation to have slowed down between 1997 and 2000 from an annual 150 percent to 100 percent.

In August 1999, the Central Bank permitted foreign currency, owned by Iraqis and non-Iraqis - to circulate in the country. At the time, $500 was the minimum amount allowed to establish an account in foreign currency. Iraqis record transactions on such accounts with a foreign currency checkbook. Foreigners were allowed to remove their funds from the country, provided that they had proper documentation for the start of investments in Iraq. Iraq has two state-owned commercial banks: the Al-Rafidayn and Al-Rashid banks.

According to Article 12 of the 1990 interim constitution, “the state assumes the responsibility for planning, directing, and steering the national economy.”

The state-owned oil sector has traditionally been the main driver of Iraq’s economy, with 95% of exchange earnings. At present, oil exports at are 75% of their pre-war level. The UN Oil-for-Food program, instituted in December 1996, was designed to improve petroleum exports in the country and enhance imports of food products and basic supplies into the country. A memorandum of understanding with the UN Secretariat, signed in May 1996, allowed for the development of this program. In 1999, this program was expanded to meet whatever humanitarian needs deemed necessary for the Iraqi general public. Committee 661 of the Security Council has approved contracts with a value of $14.1 billion. Supplies and equipment worth $9.3 billion have only been delivered to the center and south of the country, however.

Despite efforts to encourage the private sector in the late 1980s, the government's control over the economy increased in the 1990s as a result of the international sanctions regulating all imports and foreign exchange.

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