Income is expected to triple in 2004, bolstered by resurgent oil revenues. Based on an assumed price of $21 a barrel, oil sales are forecast to reach NID 18,000,000 million ($11,900 million), increasing to NID 29,617,000 million ($14,300 million) by 2006. Additional income is expected to come from the introduction of a 5 per cent reconstruction levy on all non-humanitarian goods imported from 1 January 2004.
The shortfall in the 2004 budget will be financed from the return of unspent funds locked in the defunct UN oil-for-food programme. Some NID 1,500,000 million ($1,000 million) from the programme has been channelled into the Development Fund for Iraq, which is intended to finance humanitarian and economic reconstruction schemes.
The 31-page CPA document states that the NID 2,550,000 million ($1,700 million) of funds belonging to the former regime or frozen in US banks will be disbursed to pay outstanding salaries and pensions and finance reconstruction schemes. The $2,400 million aid package provided by the US government to fund initial reconstruction work is referred to as an ‘off budget’ source of finance.
The announcement of the budget coincided with the introduction on 15 October of the new Iraqi dinar (NID) currency, replacing the old dinar notes of the former regime and the ‘Swiss dinars’ previously used as legal tender in the north. The NID notes have been issued in denominations of 50, 250, 1,000, 10,000 and 25,000. In mid-October, the dollar was worth about NID 1,500. Iraqis will have until 15 January to exchange the old notes.