September 22, 2005
JS-2939

U.S.-Iraq Macroeconomic and Financial Forum Meets

Secretary Snow and Iraqi Finance Minister Ali Allawi today co-chaired the first meeting of the U.S.-Iraq Macroeconomic and Financial Forum. This new Forum is part of the broader bilateral economic dialogue known as the Joint Commission on Reconstruction and Economic Development (JCRED). They discussed key policy and implementation issues affecting Iraq's economic reconstruction, with a focus on the macroeconomy and the financial sector.

They were joined in the discussion by key members of the U.S. and Iraqi economic teams, including Governor of the Central Bank of Iraq Dr. Sinan al-Shabibi, and participants from the State Department, National Security Council, World Bank, Federal Reserve Board, and the Federal Reserve Bank of New York.

Much of the session was devoted to Iraqi efforts to secure passage of a fully-financed 2006 budget and to develop a system for sound budget formulation and execution. There was also extensive discussion of the monetary policy instruments needed for Iraq to maintain price stability. The participants discussed ways in which to ensure that Iraq's oil wealth is used to promote economic growth, to better mobilize the Iraqi private sector and to revitalize the banking sector.

Secretary Snow and Minister Allawi noted substantial progress over the past year in many areas of fiscal and monetary policy:

• Iraq is well on the way to executing a fully-financed budget in 2005.
• Iraq's 2006 budget will include measures to reduce meaningfully the cost of the government's subsidy program both in 2006 and beyond.
• The Iraqi dinar remains sound and stable.
• The Central Bank of Iraq has been expanding its set of monetary policy tools.

In addition, Secretary Snow and Minister Allawi also welcomed progress on settling Iraq's commercial debt and signing bilateral sovereign debt agreements under the Paris Club.