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FINANCIAL PLANNING FOR IRAQ UNSOUND, NEW
REPORT FINDS
April 2004
 Read
the full report 
NEW YORK, April 8, 2004-Ahead of a deadline for the transfer
of power, the Coalition Provisional Authority's reporting
of Iraqi finances falls short of international standards of
accounting and transparency, said a report by the Open Society
Institute's Iraq Revenue Watch project. The report, Opening
the Books: Transparent Budgeting for Iraq, urges the CPA
and the Iraqi Governing Council to make further improvements
in accordance with these standards before a new Iraqi government
is elected in 2005.
"Budgetary transparency and accountability can help
ensure that Iraq does not revert to Saddam Hussein's tyranny
of secrecy," said Anthony Shorris, Frederick H. Schultz
Professor of International Economic Policy at the Woodrow
Wilson School of Public and International Affairs at Princeton
University, who authored the report. "The people of Iraq-as
well as the global financial community-must understand the
sources and uses of their country's resources."
The CPA has an opportunity to leave behind practices that
depart from decades of financial mismanagement. Iraq Revenue
Watch's first report on the CPA's emergency budget for 2003
outlined how the CPA could develop a rudimentary framework
for sound financial reporting in future budgets. But while
the CPA has made progress over the past year, this is not
nearly enough to set Iraq on a road to meeting the standards
expected of a nation seeking to return to active participation
in the global economy. Sound financial management is essential
for the CPA and the Iraqi Governing Council.
Iraq's 2004 budget, produced by the CPA and Iraq's Ministries
of Finance and Planning, is the country's first full-year
financial plan since Saddam Hussein's removal. However, it
lacks key information about state-owned enterprises, financing
for sub-national governments, and contingencies that pose
significant risks to Iraq's public purse. There is no contingency
planning for what Iraq will do if oil prices fall or exports
are disrupted, if hostilities resume, or foreign aid fails
to materialize.
Further, there is little public involvement in the allocation
of Iraq's resources, and the report urges the CPA to create
opportunities for public input. This includes increased action
on the part of Iraqi audit institutions.
With only 18 months to draft a constitution for a fully sovereign
Iraq, the CPA and the Iraqi Governing Council must take immediate
action to reverse these trends. "Now is the time to lay
the ground for a more stable, prosperous Iraq," said
Isam al Khafaji, director of Iraq Revenue Watch.
The report calls on the CPA and interim government to develop
contingency plans for the many risks to the Iraqi budget,
and suggests they develop templates that a future government
can use in reporting on the budget. It also calls for the
International Advisory and Monitoring Board and the Iraqi
Board of Supreme Audit to take on the important task of monitoring
Iraq's oil revenues.
Read
the full report
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