Iraq to earn millions from $5 billion federal deposit (08/02/05)

Iraq's central bank will be allowed to open a deposit with the Federal Reserve Bank of New York, which will earn it millions of dollars in vital interest income, a top US Treasury official has said.

US Treasury Under Secretary John Taylor

US Treasury Under Secretary John Taylor stated that President George W. Bush had issued an executive order last November granting Iraq the right to open the account.

"This enables the central bank to earn income on its reserves, of approximately $5 billion, that will be over $100 million a year. That can be used to improve infrastructure," Taylor told a news conference in Baghdad during a brief visit.

He said the dollars had been accumulated by the Iraqis since the creation of the new Iraqi dinar and not sold to them by Washington.

Taylor, who represented the US at a summit of the Group of Seven rich nations in London over the weekend, also said Iraq was making progress in winning more forgiveness from creditors owed $120 billion. However, he gave no specific details on the progress made. 'Those discussions are going well,' he said.

Iraq won an 80 per cent write-off on $38.9 billion of debts owed to the Paris Club of creditor nations last November and wants a similar write-off of the $45 billion owed to Gulf States.

Taylor said he would be visiting several other countries during his trip to the region but declined to say whether Iraqi debt forgiveness would be on the agenda.

The US has written off all of the $4.1 billion it was owed by Baghdad and has urged other countries to follow suit.

Source: TradeArabia