Administrator’s Weekly Report Economy June 5 — June 11, 2004 HIGHLIGHTS As of June 6, 2004, estimated crude oil export revenue reached $7.4 billion for 2004 (crude oil export revenue for 2003 [June - December] was $5.1 billion). The Salah ad Din Chamber of Commerce is developing a Trade Center in Tikrit to support regional investment and businesses within a market economy. I. BUILD FINANCIAL MARKET STRUCTURES Modernize the Central Bank; Commercial Banking System; Re-establish Baghdad Stock Exchange; Restructure National Debt At the New Iraqi Dinar (NID) auction on June 8, the settlement price was 1,455 dinars per dollar, the same as the previous day, and up 0.34 percent from a week ago. The amount of dollars sold at the auction varied over the week from $0.9 - $7.7 million. CPA Administrator L. Paul Bremer signed CPA Order Number 94, which promulgates a revised Banking Law. The revised Banking Law amends the current Banking Law by making technical corrections, and removing the limit of six foreign bank licenses in Iraq. The amendments also clarify the jurisdiction of the Central Bank to ensure that its independence is maintained. These changes will ultimately strengthen the perceived integrity of the Iraq banking system. Additionally, the removal of the limit of six foreign bank licenses is consistent with the transition of Iraq to a market economy, and is an important signal of Iraq’s willingness to open its borders. Central Bank officials now use a standardized process to assess Iraqi bank activities. The new process is based on the CAMEL (capital, assets, management, earnings and liquidity, and sensitivity to market risk) rating system, used in many countries. The CAMEL policy is complete and has been submitted to Central Bank management officials for review before adoption. The policy will support the use of risk based supervision by bank supervision staff at the Central Bank. New Iraqi Dinar monthly fluctuation: March 8 – April 8: NID depreciate 0.8 percent April 8 – May 8: NID depreciated 2.5 percent May 8 – June 8: NID appreciated 0.3 percent Source: CPA Senior Advisor to the Central Bank of Iraq The annualized weekly volatility of the New Iraqi Dinar this past week was 0.7 percent. II. DEVELOP TRANSPARENT BUDGETING AND ACCOUNTING ARRANGEMENTS Redrafting and Execution of 2004 Budget As of June 9, the balance in the Development Fund for Iraq (DFI) was $9.7 billion, comprised of $8.5 billion in the original Federal Reserve Bank of New York (FRBNY) account, and $1.2 billion on deposit in DFI-Baghdad. Of this, $4.4 billion is already committed to projects, and the remaining $5.3 billion is slated for projected 2004 budget items. Since establishment, the DFI investment program at FRBNY has earned $30.6 million in interest. As of June 9, the total payments out of the DFI amounted to $10.7 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 June 9, $7.8 billion are committed to Iraq relief and reconstruction efforts, 75 percent of the July 1 goal. As of June 9, $3.7 billion of funds are obligated with contractors. The following shows the money committed by sector as of June 9 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 June 6, 2004, estimated crude oil export revenue reached $7.4 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; Develop Framework for Collateralizing Movable and Immovable Property No information on letters of credit is available this week. Regular reporting will resume next week. Private Sector Development awarded a tender for a $10 million DFI microfinance grant targeting areas affected by the recent unrest and southern Iraq in general. The winner was an NGO already operating in the area and loan distribution should start in about two weeks. The Salah ad Din Chamber of Commerce is developing a Trade Center in Tikrit to support regional investment and businesses within a market economy. The center will assist in awarding local government contracts; provide advisory services to prospective investors on local investment and trade opportunities; and involve civic organizations in the transformation to a market economy. The Tikrit Business Center, located in the Trade Center, will provide micro finance and business development services to Salah ad Din citizens. V. PURSUE NATIONAL STRATEGY FOR HUMAN RESOURCES DEVELOPMENT Begin to employ workers in Public Works programs around the country Ongoing security problems are still creating gaps in employment reporting. Security/national defense employs: 248,472 Governorate teams employ: 1,550 PAGE PAGE 4 FOUO Prepared by the Information Management Unit PAGE 1 FOUO Prepared by the Information Management Unit