Cablegate: Iraq's Economy On the Eve of the Election: Are You

VZCZCXRO0871
PP RUEHBC RUEHDA RUEHDE RUEHDH RUEHIHL RUEHKUK
DE RUEHGB #2660/01 2761124
ZNR UUUUU ZZH
P 031124Z OCT 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 4930
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 BAGHDAD 002660

AIDAC
SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID EFIN ETRD ECON PGOV PREL IZ
SUBJECT: IRAQ'S ECONOMY ON THE EVE OF THE ELECTION: ARE YOU
BETTER OFF NOW THAN FOUR YEARS AGO?

REF: A. BAGHDAD 2301
B. BAGHDAD 2514

This cable is sensitive but unclassified; please protect
accordingly.

1. (SBU) On the eve of the election season in Iraq, we do not
expect any major party or coalition to campaign on a record
of economic success. Security and stability continue to be
the primary focus, and are essential for economic success.
However, it is worthwhile to compare today,s Iraqi economy
with the economy that existed before the formation of Iraq's
first democratically elected government in May 2006.

2. (SBU) From a strictly economic point view, looking at the
macroeconomic figures below, an average Iraqi might answer
"yes"to the question: "Are you better off now than you were
four years ago?" A general improvement in the security
situation has contributed to a fall in inflation (ref A).
Private bank lending has surpassed private bank capital (ref
B), meaning more Iraqi consumers and businesses are able to
borrow to achieve their goals. The benefits of technology
are spreading as power generation is improving and cell phone
and internet usage is growing. Finally, total trade and
imports grew considerably, reflecting that more foreign goods
are in the market than four years ago. (NOTE: August 2009 is
the most recent point for which we have corresponding data.
Projected data are noted with a (P). END NOTE.)

3. (U)

Indicator December 2005 August 2009
--------------------------------------------- ----------

Headline inflation, 31.6% -0.3%
year-over-year
(y-o-y) Consumer
Price Index

Core inflation 28.6% 10.8%

Civilian casualties 12,515 5,336
(cumulative
total for 12 months
period ending
December 2005 and
August 2009)

Dinar/Dollar exchange 1474 1170
rate, as of
year end 2005 and month
end Aug 2009

MinFinance T-Bill rates, 8.9% 5.8%
as of year
end 2005 and month end
Aug 2009

CBI Policy Rate, as of 7% 7%
year end 2005
and month end August 2009

Bank loans to customers $1.16 $4.48
in billions USD

Bank customer deposits, $9.39 $35.58
in billions USD

Imports of goods and $24.9 $38.9 (P)
services, in billions USD

Exports of goods and $23.5 $36.2 (P)
services, in billions USD

Nominal GDP, $31.4 $68.6 (P)
in billions USD

GDP Growth -0.7% 6.9% (P)

Oil GDP Growth -8.1% 8.7% (P)

Crude Oil Production, 1.9 2.5 (P)
millions barrels per day

Crude Oil Exports, 1.4 2.15
(P)
millions barrels per day

Gross Official Reserves, $12 $42
in billlions USD

BAGHDAD 00002660 002 OF 002

Total Gross External Debt, $351.6 $131.7
in billions USD

Current Account, $1.9 $-4.2
in billions USD

GOI Budget, billions USD $23.844 $58.615

GOI Expenditures, $17.834 $16.634
billions USD

Avg. Daily Megawatt Hours 91,725 135,890

Cell phone subscribers, 3.8 19.0
in millions

Internet subscribers 147,076 820,000 (e)

Unemployment 25% - 40% 12% - 30%

For sources and additional info, please contact the Finance
and Development Team of the Embassy Baghdad Economic
Section: chowpl@state.sgov.gov / woolfordmk@state.sgov.gov
/ grauerkk@state.sgov.gov / werbergsx@state.sgov.gov.
HILL

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