Article 109 of the Iraqi Constitution gives the federal government “exclusive authority” to formulate fiscal policy. Furthermore, Article 28 stipulates that no taxes shall be levied, amended, collected or exempted except by law. The Council of Representatives must approve the annual budget, which is prepared by the Council of Ministers.
The Board of Supreme Audit is an independent body attached to the Council of Representatives and regulated by law. A public commission is to be established to audit and appropriate public revenues. It is to be comprised of experts from the federal government, the regions, the governorates, and its representatives to verify the fair distribution of international grants and loans and “the ideal use and division of the federal financial resources,” according to Article 105 of the Constitution.
Order 87 of the Coalition Provisional Authority governs the award of public contracts. The Order provides a set of public procurement guidelines and creates an Office of Government Public Contract Policy within the Ministry of Planning and Development Cooperation to oversee the implementation of the guidelines. There is also provision for an independent administrative tribunal to have jurisdiction over complaints and disputes arising under or relating to the award of public contracts. Reform is currently being undertaken in the second phase of the World Bank’s Capacity Building program, which targets Public Procurement Reform.
The Central Bank of Iraq is an independent body responsible to the Council of Representatives, according to Article 102 of the Constitution. It was reorganized by law in March 2004. It is authorized to issue bank licenses and to supervise the banking system, which consists of seven state banks and nineteen privately owned ones. They operate under the Bank Law of September 2003, which was designed to bring Iraq’s legal framework for banking in line with international standards.
Political uncertainties have hampered private sector recovery and prevented plans of the Coalition Provisional Authority to privatize major industries.
The Baghdad Stock Exchange opened in 1992 and reopened in June 2004. The Iraq Securities Commission was recently set up to monitor the exchange and rewrite financial laws to allow foreign investment. The Central Bank of Iraq conducts public auctions of government securities. The Ministry of Finance is authorized under the Public Debt Law to issue obligations guaranteed by the Government of Iraq.
Capitalization of the 92 companies listed on the BSE was $2.2 billion in April 2006, but the Iraq Stock Exchange Index had fallen to half its peak value, reflecting capital movements in the richer stock markets of the Gulf Cooperation Council as well as local insecurity.
Banking Studies Center, established by Law No. 39 of 1999, has functioned under the tutelage of the Central Bank of Iraq since March 2000. Its principal task is to train bankers but it also sponsors research and financial consultation.
International Transparency Standards
Iraq declared its intention to join the International Monetary Fund’s General Data Dissemination System in September 2005 and appointed a coordinator to this effect. The IMF has engaged since 2003 in improving Iraq’s macroeconomic statistical capabilities, once among the most developed in the region.