VZCZCXYZ5463
RR RUEHWEB

DE RUEHGB #0620/01 0630801
ZNY CCCCC ZZH
R 030801Z MAR 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 6011
INFO RUCNRAQ/IRAQ COLLECTIVE

C O N F I D E N T I A L BAGHDAD 000620 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/03/2018 
TAGS: ECON EFIN EAID PGOV PREL IZ
SUBJECT: PRT NINEWA: PROVINCIAL BUDGET EXECUTION: HARD-WON 
PROGRESS IN 2007, MUCH MORE READY FOR 2008 
 
Classified By: PRT Ninewa Team Leader Jason Hyland for reasons 1.4 (b/d 
) 
 
¶1. This is a Ninewa Provincial Reconstruction Team (PRT) 
message. 
 
SUMMARY 
------- 
 
¶2. (SBU) Despite corruption in provincial budget execution in 
2006 and delays in 2007, Ninewa was the first province to 
submit its 2008 capital budget to the Government of Iraq, for 
which it received special recognition from the Minister of 
Finance. Ninewa has also executed by now three-quarters of 
its 2007 capital budget, and is closing increasingly fast on 
full execution. With the help of a USAID program and daily 
PRT contact with provincial stakeholders, the 2008 budget was 
built in a transparent, inclusive way that brought mayors, 
provincial officials and directors general together jointly 
to set priorities. (NOTE: In our travels around the province, 
we have yet to meet a mayor who did not participate in this 
open process or know exactly what his budget allocation was. 
END NOTE.) Ninewa provincial leaders are confident ) perhaps 
too confident ) that they now have the right process in 
place and adequate human resources to execute the 2008 budget 
effectively. With Mosul reconstruction a high-profile issue 
because of the ongoing military operations in this strategic 
city, Ninewa can expect even greater scrutiny as it manages 
the anticipated ID 428 billion budget allocation 
(approximately USD 354 million, ID 1210 = USD 1) for 2008. 
 
A CHECKERED HISTORY 
------------------- 
 
¶3. (SBU) Ninewa had to re-execute large portions of its ID 
303 billion capital budget (approximately USD 250 million) 
for 2006 after key provincial officials were arrested for 
misallocation of funds.  As that process dragged into 2007, 
the province got a late start on execution of its ID 285 
billion (approximately USD 236 million) 2007 budget.  With 
less than 40 percent of the 2007 budget executed in October 
2007, the assistant governor for technical affairs left his 
job.  As of the end of January, Ninewa's execution rate for 
the 2007 budget had jumped to 74 percent, though its 
disbursal rate was still less than 40 percent because of 
delays in cash deliveries from the Ministry of Finance. 
 
HOW THE PRT IS HELPING 
---------------------- 
 
¶4. (SBU) PRT Ninewa is focusing its efforts on quickly 
completing execution of the 2007 budget so that the 2008 
process can proceed immediately once the national budget is 
approved by the Presidency Council.  The PRT provides 
procurement assistance to the province and is actively 
coaching and training senior provincial government officials 
in the budget execution decision-making process.  The PRT has 
gained provincial government approval for GOI procurement 
experts to conduct training in Mosul and hire three 
additional budget execution staff for the province.  In 
addition, USAID implementing partner RTI will train 100 
newly-hired Ninewa Government officials in procurement and 
budget execution.  The PRT, together with USAID/RTI, are 
collaborating with key Ninewa officials in training for other 
areas as well: budget administration, data integrity, 
economic analysis, financial management, program evaluation 
and reporting. 
 
¶5. (SBU) Since the PRT has taken an aggressive and pro-active 
approach to capacity development in Ninewa,s budget 
execution process, we have seen positive, quantifiable 
advances.  The beginning execution rate had been below 
average when measured against other Iraqi provinces.  In the 
last four reporting months, corresponding with the time since 
the PRT introduced and implemented advisory and training 
programs, the province accelerated its budget execution. 
Since October, the province showed an average monthly 
execution increase of 8.67 percent, compared to a monthly 
increase of only 5 percent in previous months. 
 
HIGH EXPECTATIONS FOR 2008 
-------------------------- 
 
¶6. (SBU) With 2007 budget execution well on its way to 
successful, though late, completion, Ninewa provincial 
authorities are well aware of the need to execute this year's 
budget quickly.  Urgent needs for reconstruction and basic 
operations funds in Mosul City will be best served in the 
short term by correct and quick execution of the 2008 budget, 
according to senior provincial officials.  The PRT is 
analyzing the 2008 budget in detail, and dedicating every 
available resource to assist the execution process. 
 
 
COMMENT 
------- 
 
¶7. (C) Budget execution is the most serious non-security 
challenge facing the Ninewa Provincial Government. Citizens 
here desperately need the cash infusion and infrastructure 
development that these capital budgets bring. A lack of 
timely support from the Ministry of Finance magnifies 
lethargic local decision-making and project management 
processes.  Even as the PRT pushes on the local level, 
national expediency in pushing cash to the province will be 
key to executing the 2008 budget on time. 
 
¶8. (C) Ninewa's capacity to rebuild its infrastructure and 
deliver essential services depends on a sufficient budget, 
including the Provincial Capital Budget, and timely 
disbursements of funds from the Ministry of Finance. 
However, the Ninewa Provincial Government also has lacked the 
proper oversight management structure and master planning 
procedures to ensure that the budget funds received were 
executed in a transparent and timely manner. Violence and 
sectarian strife delay capital budget execution by increasing 
the time and cost needed to implement contracts. Iraqi 
weaknesses in procurement, budgeting, and accounting 
procedures impede completion of capital projects. The 
Provincial Government is off to a good start with the 2008 
Capital Budget; the PRT will continue to track on a daily 
basis how Ninewa executes its budget this year, and provide 
all available support to ensure success. 
 
CROCKER