MINISTER OF FINANCE EMPHASIZES BUDGET EXECUTION

C O N F I D E N T I A L BAGHDAD 000518

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/13/2017
TAGS: ECON EFIN PGOV IZ
SUBJECT: MINISTER OF FINANCE EMPHASIZES BUDGET EXECUTION

REF: A. BAGHDAD 441

B. BAGHDAD 26

Classified By: Economic Minister-Counselor Daniel Weygandt for reasons
1.4 (b) and (d).


1. (C) Summary: Minister of Finance Bayan Jabr met with the
Treasury Attache, Coordinator for the Economic Transition,
and the NEA-I DAS on February 10. Senior MoF officials and
the Central Bank Governor Shabibi were also in attendance.
Minister Jabr emphasized the need to focus on budget
execution now that the 2007 Budget has been approved by the
Council of Representatives (CoR). He also discussed
corruption and GOI approval of soft loans and corruption.
End summary.

--------------
Focus on Budget Execution
--------------


2. (C) The Minister of Finance said that now that the 2007
budget has been approved by the CoR (ref A) he would start a
focused effort with ministers and the provincial councils on
budget execution. Ambassador Carney, Coordinator for the
Economic Transition, emphasized the need for both the Iraqi
people and Coalition partners to see that the Iraqi
government is taking its responsibilities seriously.
Minister Jabr said that he had given orders on February 9 for
a directive to be issued releasing 10 percent of the year's
allocation on February 11. (Note: This release would likely
take about a week to be enacted. End note.) The Minister
also noted that ministries and provinces that do not spend
their money in a timely manner will be subject to a mid-year
review in which the money is reallocated, as stipulated in
the 2007 budget law (ref B). Dr. Azez, senior advisor to the
Minister of Finance and to Vice President Adel Abdul Mehdi,
said that provinces unable to execute their budget due to
security reasons would be assisted rather than punished.

--------------
Corruption
--------------


3. (C) Ambassador Carney also raised the issue of
corruption. Minister Jabr said that "we don't have a problem
with corruption, we have a problem of the fear of accusations
of corruption," which slowed down budget execution. Minister
Jabr said that corruption was a problem in previous
governments when the ministries were able to spend money
without any accountability. Since the Jaafari government put
into place a system where a high economic committee has
oversight over expenditures above a threshold, and the
Council of Ministers must approve any expenditure over 50
million dollars, "90 percent of the corruption is gone," he
said. (Note: these threshold numbers are currently under
review to assist in expediting budget execution. End note.)
Dr. Azez recommended more support for the Board of Supreme
Audit, noting that the Inspector Generals and the Commission
for Public Integrity were created without enough detail on
the scope of their roles.

--------------
GOI Approval of Soft Loans
--------------


4. (C) A streamlined process for signing international loans
was the one part of the 2007 budget law that was struck down
by the CoR. Dr. Azez said the ongoing experience of trying
to get the Japanese loans approved led to an effort by the
Ministry of Finance to streamline the process of getting
approval from the Council of Representatives, as stipulated
by the constitution. "We limited the loan amount and offered
to do quarterly reviews for the CoR," Dr. Azez said, "but
they didn't understand and thought we were trying to take
some of their authority." Instead the Ministry of Finance
plans to submit requests to the CoR on a project by project
basis.
SPECKHARD