Volume 1 Cedric - revised luca Final - RUIG-GIAN

ole as provider of public goods thereafter. Great attention must be given to promotingadministrative capacity. Governmental structure will be reconsidered, with the intent toeliminate governmental departments that compete with the private sector in economic andservice activities. The State will come to rely on the private sector for some purposes,rather than attempting to internalize these functions by enlarging its departments.An immediate need is for Iraqi institutions to strengthen systems of accountability.This will both improve the efficient use of Iraqi resources and facilitate the flow of donorfunds; this is particularly important to allow Iraq to absorb a large degree of donorassistance using its own existing administrative and implementation structures and withoutcreating parallel systems. The Government is also called upon to provide services to itscitizens in a transparent, respectful, efficient and dedicated manner, free of corruption. Thiswill require improved management to increase the efficiency of most governmentaldepartments, and attracting and training competent young people.A general civil service reform framework must be considered including all aspects ofhuman resource management, but focused on fiscal sustainability and ensuring atransitional process without creating socia l unrest. Additional accountability institutionsand anti-corruption initiatives are required, as is a system for setting priorities in publicspending, a degree of fiscal decentralization, improved public procurement and strongerfinancial management.Recent indications point to substantial progress in removing some of the obstacles toan open market. This progress, modest but positive, has been reflected in thestandardization of currency value, checking of the inflation rate, the institutionalization ofan open trade and investment regime with an emphasis on strengthening the private sector.Increase in external reserves and currency stabilization as a result of improvedmanagement of the money supply have helped in reducing inflation to 20 - 25 per centcompared to 40 - 50 per cent in 2004. 72 Some of these achievements have been reflected inrecent estimates of GDP per capita rising to about 1,200 US$ in 2004. 73 While theexchange rate has remained largely unchanged, the CBI aims to build up its netinternational reserves to at least 6.0 billion US$ by end of 2005. 74 Further, by the end of2004, oil production, which constitutes about three quarters of the economy, hadrecovered. Non-oil economic activity has also been recovering, driven by reconstructionand a partial revival in the agricultural sector, although many enterprises are not yet fullyoperational. Commercial activity at the retail level is brisk.However, two perilous areas, namely unemployment and security, continue to be themost challenging issues that could seriously undermine the whole economic, social andpolitical transformation the country is undergoing. The over two million unemployed areconsidered as one of the major sources of instability; job creation is therefore vital tobuilding peace and stability in Iraq. Reducing unemployment rates could make a majorcontribution in this regard, which could in turn help generate a recovery in investment andgrowth, or "at least reduce its detrimental effect on the livelihood, security and progress ofIraq.” 75 A “plan of action”, which was adopted by the International EmploymentConference on Jobs for the Future of Iraq, organised by the ILO in December 2004 inAmman, focused on the optimal means to capitalize on the reconstruction drive in Iraq andhow it can create jobs. 7672 Mr. Senan Al Shabibi Governor of the CBI)73 Dr Mehdi AlHafidh, former Minister of Planning and Development Cooperation, Speaking at a Conference onRebuilding Iraq, Amman, 200574 IMF Country Report no..o4/325, September, 200475 Former Iraqi Labour and Social Affairs Minister Leila Abdul Latif statement to the ILO Amman Conference,December, 200476International Employment Conference Jobs for the Future of Iraq, Amman, 12 to 13 December, 200461