VZCZCXRO0507
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #0717/01 0701548
ZNR UUUUU ZZH
R 101548Z MAR 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 6166
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 000717 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EEB/IFD/OMA FOR ASNOW AND RFIGUEROA 
NEA/RA FOR JPALLARES AND JSCOVITCH 
 
E.O. 12958: N/A 
TAGS: ECON EAID EFIN PREL PGOV IZ
SUBJECT: IRAQ FY08 REPORT ON FISCAL TRANSPARENCY 
 
REF: STATE 16737 
 
¶1. (U) As requested in reftel, Embassy Baghdad's submission 
for the congressionally-mandated report on fiscal 
transparency for countries receiving USG assistance follows: 
 
¶2. (SBU) Begin text: The Government of Iraq (GoI) recently 
reiterated its commitment to fiscal transparency in the 
U.S.-Iraq Dialogue for Economic Cooperation's Joint 
Communique issued February 28, 2008. The text of the 2008 
federal budget law, which the Presidency Council endorsed on 
February 27, is available in Arabic on the internet 
(www.iraqpresidency.net). The GoI underscored its commitment 
to financial transparency by signaling its intent to join the 
Extractive Industries Transparency Initiative (EITI) 
Secretariat in February 2008. 
 
SIPDIS 
 
¶3. (SBU) Regulations governing Iraq's public financial 
management stem from the 2004 Financial Management Law, which 
stipulates a number of measures aimed at fostering 
transparency and ensuring accountability of public finances. 
The GoI's adherence to these measures has been inconsistent, 
due primarily to capacity constraints. Sectarian-based 
political rivalries further exacerbate attempts within the 
government to foster greater fiscal transparency. 
 
¶4. (SBU) The primary responsibility for ensuring the 
Development Fund for Iraq (DFI), into which all petroleum 
revenues are deposited, is used in a transparent manner for 
the benefit of the Iraqi people rests with the International 
Advisory and Monitoring Board (IAMB) for Iraq, pursuant to 
United Nations Security Council Resolutions 1483, 1546, 1637, 
and 1790. Beginning in 2009, the IAMB's oversight authority 
will be transferred to the Iraqi Committee of Financial 
Experts (COFE), established by the Council of Ministers in 
October 2006 to exercise oversight over petroleum revenues, 
working alongside the IAMB. According to IAMB, COFE, chaired 
by the President of the Board of Supreme Audit, is 
independent, competent and professional. 
 
¶5. (SBU) Several efforts are underway to strengthen public 
financial management, helping Iraq meet the goals set in the 
International Compact with Iraq. The World Bank has supported 
the GoI to undertake a Public Expenditure and Institutional 
Assessment (PEIA) to outline steps for strengthening the 
accountability and transparency of public finance 
institutions and policies. The Bank is now in the process of 
working with the GoI to define a broad public finance 
management reform program that will take into account the 
efforts of various international partners, and will be 
implemented over the next several years. Additionally, with 
World Bank funding and technical assistance, the GoI's 
Central Organization for Statistics and Information 
Technology (COSIT) completed in 2007 a nationwide 
socioeconomic household survey, the results of which are 
anticipated to be released in mid to late 2008. The first 
survey of this type to be conducted in Iraq since 1993, it 
will examine income, expenditures, and living standards, and 
provide the basis for a new consumer price index (CPI) with 
updated statistical weights. 
 
¶6. (SBU) USAID has been working on the development and 
installation of the Iraqi Financial Management Information 
System. To date, Iraq has depended on its pre-2003 legacy 
paper ledger system. The absence of timely and reliable data 
impedes Iraq's ability to effectively manage budget planning, 
monitoring, and expenditure. Although work was suspended 
after five USAID contractors were kidnapped from a Ministry 
of Finance building in May 2007, efforts resumed in 
mid-January 2008 with renewed commitment by Iraq's Minister 
of Finance and an memorandum of understanding (MOU) outlining 
U.S. and Iraqi responsibilities. USAID is also supporting a 
census of public sector employees to promote greater payroll 
transparency and identify and eliminate possible ghost 
employees. The anticipated completion date for the census is 
mid-2008, and the eventual goal is to computerize the payroll 
and establish a bank transfer system for wage payments. 
 
¶7. (U) USAID's Tatweer project is a USD 200 million, 
three-year program that works to build the capacity of 11 key 
Iraqi ministries and four executive offices within the GoI. 
Tatweer focuses on three result areas: 1) improving the 
skills of public administration managers; 2) improving 
systems and processes in key ministries and the Prime 
Minister's Office; and 3) expanding the GoI's public 
administration training capacity. As a capacity building 
project, Tatweer is promoting the establishment of systems 
and procedures that increase transparency and accountability, 
with Ministry Engagement Teams encouraging ministries to use 
 
BAGHDAD 00000717  002 OF 002 
 
 
policies that prevent corruption. To this end, an 
transparency fostering component is built into all of 
Tatweer's core training classes. 
 
¶8. (U) Finally, Tatweer has a stand-alone corruption 
combating component that focuses on providing assistance to 
the inspectors general (IG's) inside the GoI's ministries. 
Over the next 12 months, Tatweer will engage the offices of 
the IG's to ensure that they have a clear understanding of 
their roles and function; to strengthen communications 
between IG offices and automate audit and inspection reports; 
and finally to strengthen IG organizational development 
skills and enhance the function of the IG Association to 
ensure sustainability. End text. 
CROCKER