- The Washington Times - Wednesday, August 6, 2008

WASHINGTON (AP) — Congressional auditors on Tuesday predicted that the Iraqi government is heading for a $79 billion cumulative budget surplus by year’s end, prompting calls from Capitol Hill for Iraqi leaders to become less reliant on U.S. taxpayers for reconstruction costs.

The projected Iraq surplus, including unspent money from 2005 through 2008, has been building because of rising world oil prices, increasing Iraqi oil production, the government’s inability to execute budgets for spending its money and persistent violence in the country, the GAO said.

The report was requested by Sen. Carl Levin, Michigan Democrat, and Sen. John W. Warner, Virginia Republican, the chairman and ranking member, respectively, of the Senate Armed Services Committee.

“The Iraqi government now has tens of billions of dollars at its disposal to fund large-scale reconstruction projects,” Mr. Levin said in a statement. “It is inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves.”

Mr. Warner said: “It is time for the sovereign government of Iraq, using its revenues, expenditures and surpluses, to fully assume the responsibility to provide essential services and improve the quality of life for the Iraqi people.”

The GAO said Iraq had an estimated cumulative budget surplus of about $29 billion from 2005 to 2007 and could have another surplus of up to $50 billion this year.

The expected surplus could be lower if Iraq passes stalled legislation for a $22 billion supplemental budget for 2008 — and if the government then executes the budget.

But the report noted oft-repeated factors holding the government back on its spending plans.

“First … [the] relative shortage of trained budgetary, procurement and other staff with the necessary technical skills as a factor limiting the Iraqi government’s ability to plan and execute its capital spending,” the GAO said, adding that a second problem is the government’s weak accounting systems.

“Third … violence and sectarian strife remain major obstacles to developing Iraqi government capacity,” it said.

The report also estimated that this year Iraq could generate $67 billion to $79 billion in oil sales. Other U.S. officials previously had said they expected the oil windfall to be about $70 billion.

“This substantial increase in revenues offers the Iraqi government the potential to better finance its own security and economic needs,” the GAO said.

Since 2005, the United States has funded a number of efforts to teach civilian and security ministries how to effectively execute their budgets.

The efforts included programs to advise and help Iraqi government employees develop the skills to plan programs and to deliver government services such as electricity, water and security effectively.

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