COALITION PROVISIONAL AUTHORITY ORDER NUMBER 95
FINANCIAL MANAGEMENT LAW AND
PUBLIC DEBT LAW
Pursuant to my authority as Administrator of the Coalition Provisional Authority
(CPA) and under the laws and usages of war, and consistent with relevant U.N.
Security Council resolutions, including Resolutions 1483 and 1511(2003),
Having worked closely with the Governing Council to ensure that economic
change occurs in a manner acceptable to the people of Iraq,
Acknowledging the Governing Council’s desire to bring about significant change
to the Iraqi economic system,
Determined to improve the conditions of life, and opportunities for all Iraqis and
to fight unemployment with its associated deleterious effect on public security
through stable financial markets,
Recognizing that Iraq needs laws concerning the issuance and payment of public
debt to assist in financing the Government and to promote confidence in the
country’s economic system,
Further recognizing the CPA’s obligation to provide for the effective
administration of Iraq,
Recalling that U.N. Security Council Resolution 1483 (2003) called upon the CPA
to promote economic reconstruction and the conditions for sustainable
Acting in a manner consistent with the Report of the Secretary General to the
Security Council of July 17, 2003, concerning the need for the development of
Iraq and the need to enact institutional and legal reforms to give it effect,
I hereby promulgate the following:
This Order promulgates the Financial Management Law, which establishes
a comprehensive framework for the conduct of fiscal and budgetary policy
in line with international best practices, by setting a structured process for
CPA/ORD/ 2 June 2004/95
the formulation of the federal budget and a number of reporting
requirements aimed at increasing the accountability and transparency of the
This Order promulgates the Public Debt Law, which authorizes the
Ministry of Finance to issue and pay debt securities guaranteed by the
Government, and establishes certain related authorities and duties, for the
purposes of financing Government operations and promoting a stable Iraqi
Financial Management Law
The Financial Management Law attached to this Order as Annex A shall have
the full force and effect of law.
Public Debt Law
The Public Debt Law attached to this Order as Annex B shall have the full
force and effect of law.
Prior to the transfer of governance authority to the Iraqi Interim
Government in accordance with Article (2)(B)(1) of the Law of the
Administration for the State of Iraq for the Transitional Period, the powers
and responsibilities assigned to the Prime Minister and Council of Ministers
by the Financial Management Law and the Public Debt Law shall be
exercised by the Administrator.
Until such time as the Iraqi Interim Government assumes full governance
authority in accordance with Article (2)(B)(1) of the Law of the
Administration for the State of Iraq for the Transitional Period, the
Ministry of Finance is prohibited from issuing new debt securities if the
issuance of such securities would increase the total level of Iraq’s public
debt, including obligations to the Central Bank, beyond the current level of
CPA/ORD/2 June 2004/95
FINANCIAL MANAGEMENT LAW OF 2004
This Law shall regulate the arrangements governing the preparation, adoption, recording,
management, execution, and reporting of the federal budget of Iraq and related issues including
public borrowing and guarantees, internal control, accounting, and auditing. The principles of
transparency, comprehensiveness, and unity shall be of fundamental importance in the
preparation and execution of the federal budget of Iraq, and in related issues.
The principle of transparency requires that budget information be classified according to
accepted international standards and presented in a way that facilitates policy analysis and
The principle of comprehensiveness requires that the budget cover all government agencies and
institutions undertaking government operations, so that the budget presents a consolidated and
complete view of these operations and is voted on, as a whole, by the body vested with national
The principle of unity requires that all government resources be directed to a common pool to be
allocated and used for public expenditure according to the priorities of the government.
Definitions for the Purposes of this Law
1) “Budget appropriation” is the legal authorization given to the government to spend public
money over the fiscal year for specified purposes.
2) “Authorized person” is a person delegated authority in writing by the Minister of Finance to
manage public money.
“Borrowings” are funds received in return for a legally binding agreement to repay.
4) “Budget” is a financial program based on annual estimates of government cash receipts and
payments, transfers, and transactions in kind.
5) “Budget executor” is an authorized person, or person delegated authority by the budget
executor, responsible for the execution of the budget.
“Capital expenditures” are the use of funds to acquire or upgrade capital assets, such as
buildings, structures, machinery, and equipment, and financial assets.
7) “Cash payments” are any monetary transactions resulting in a reduction in the balance of a
bank account or cash balance.
8) “Chart of accounts” is a structured list of accounting codes used to classify and record budget
revenue and expenditure transactions.
9) “Commitment” is an undertaking to make an expenditure following the conclusion of a
binding agreement that will result in a payment.
10) “Contingency reserves” are funds allocated to the Ministry of Finance in the annual budget
law or supplementary budget laws for the purpose of making expenditures that are urgent and
unforeseen at the time of passage of the annual budget law.
11) “Council of Ministers” is the Council of Ministers described in the Law of Administration
for the State of Iraq for the Transitional Period (the “Transitional Administration Law” or
12) “Current expenditures” are expenditures which are not capital expenditures, such as salaries,
supplies, services, and fuel.
13) “Economic classification” is a systematic arrangement of budget revenue and expenditure
items by type for the purposes of financial statistical reporting and analysis.
14) “Financial assets” include foreign or domestic cash, deposits, loans, bonds, financial
derivatives, accounts receivable, other types of claims, monetary gold, special drawing rights
(SDRs), treasury bills, and shares.
15) “Fiscal year” is the general government’s accounting period, which begins on January 1st
and ends on December 31st.
16) “Federal budget” is the estimate of the total annual receipts and payments as approved by
the Federal Government.
17) “Federal government” is the Iraqi Interim Government, the Iraqi Transitional Government,
or the Government to be elected pursuant to a permanent constitution, as set forth in Article
61 of the Law of Administration for the State of Iraq for the Transitional Period (the
“Transitional Administration Law” or “TAL”).
18) “Federal government bank account” is a bank account for the receipt, payment, or transfer
of public money belonging to the federal government.
19) “Functional classification system” means the array of budget authority, expenditures, and
other budget data according to the major purpose served—for example, agriculture, national
defense, and transportation.
20) “General government” comprises all government units primarily engaged in non-market
operations, including the federal government, regional governments, governorates, municipal
and local governments.
21) “Government debt securities” are debt securities issued by the Ministry of Finance, including
debt securities lawfully issued prior to the effective date of the Public Debt Law promulgated
22) “Governorates’ budgets” are the estimates of annual receipts and payments of the
23) “Governorate Councils” are the Governorate Councils described in Section 2 of CPA Order
Number 71, Local Governmental Powers (the “Local Governmental Powers Law”).
24) “Line items” are the payments specifically itemized in the budget law.
25) “In kind” means a transfer or exchange in which payment takes the form of tangible
property, intangible property, or services rather than cash.
26) “Liability” is a present obligation arising from past events, the settlement of which is
expected to result in a future payment in cash or in kind.
27) “Outlay” means a payment to liquidate an obligation other than borrowing.
28) “Payment arrears” arise when a payment is not made by its due-for-payment date.
29) “Petroleum” means hydrocarbons, including, but not limited to, crude oil, natural gas, and
natural gas liquids and refined petroleum products.
30) “Petroleum revenue account” means the Development Fund for Iraq (DFI) account as
described in United Nations Security Council Resolution 1483 (2003) or any successor
account to the DFI.
31) “Public money” means cash and bank deposits within the custody and control of the federal
32) “Public corporations” are
(1) State companies, as defined in Law Number 22 of 1997 on State Companies; and
(2) any other juridical person or unit that is owned or controlled by the federal
government, and produces goods or services for the market and, in the case of a unit which is not
a juridical person, functions independently and is capable of maintaining separate accounting.
33) “Special budgetary funds” are special funds whose sources, uses, and purposes are
established by law.
34) “Spending units” are the ministries of the federal government and the administrative bodies
of the federal and regional governments, governorates, and municipal and local governments,
to which funding is allocated in the annual budget law.
35) “Reallocate,” in relation to a budget appropriation, means to move budgetary resources
from one budget account, unit, or line item to another.
36) “Transfers” are the provision of goods and services, assets (including financial assets), or
labor that do not require the recipient to provide a good, service, payment, or payment-inkind
37) “Treasury Consolidated Account” is a system managed by the Ministry of Finance for
consolidating the balances of the cash accounts of the federal government for the purpose of
efficient cash management.
38) “Treasury general ledger” is a system, based on double entry principles, of accounting for,
executing, and reporting the budget.
39) “Treasury Single Account” is a bank account, or a set of linked bank accounts, of the
government through which all government receipts and payments are channeled. It is
controlled by the Ministry of Finance and is maintained at the Central Bank.
40) “Government” is the public authorities and agencies of Iraq, which are entities established
through political processes, and that exercise legislative, judicial or executive authority
within the territory of Iraq. Government does not include public corporations.
41) “Government debt” consists of all liabilities of the government that require payment or
payments of interest and/or principal by the borrower to the lender at a date or dates in the
42) “Petroleum revenue” is petroleum export revenue, non-tax revenue earned from the sale of
petroleum to domestic buyers (collectively, petroleum non-tax revenue), and tax revenue
levied on petroleum (petroleum tax revenue).
43) “Petroleum export revenue” is non-tax revenue earned from the sale of petroleum to foreign
44) “Publicly available” means that information is available for ready access by any member of
the public. This includes, but is not limited to, publication in the Official Gazette, on an
unrestricted website, or in widely available public newspapers.
Exercise and Delegation of Authority
1) The Minister of Finance may issue regulations, instructions, guidelines or directions as
necessary to give effect to and implement this Law.
The Minister of Finance may delegate to officials within the Ministry of Finance who are
authorized persons those authorities that are conferred upon him under this Order, except the
authority to waive the right of the federal government to collect amounts owing, to submit
the draft annual federal budget to the Council of Ministers, and to sign borrowing and
guarantee contracts of the federal government.
1) The budget is adopted for the fiscal year and shall be valid during the year for which it is
passed. Unspent appropriations will lapse at the end of the fiscal year for which they have
been approved, except to the extent that goods and services have been validly ordered and
The draft annual budget law will be determined by the Council of Ministers and will be
submitted by the Minister of Finance by October 10th to the body vested with national
legislative authority for approval or adjustment pursuant to Article 33(C) of the TAL.
Pursuant to Article 25 of the TAL, the federal government has exclusive competence in
drawing up the federal budget of Iraq. The Governorate Council, pursuant to Section 2 of the
Local Governmental Powers Law, possesses the limited amendment authority to amend the
budget plan of a ministry with regard to a specific project. Individual governorates’ budgets
for the fiscal year shall be passed by the Governorate Councils. Individual regions’ budgets
for the fiscal year shall be passed by the regional governments.
4) The annual federal budget shall comprise:
a) the receipts and payments in cash or in kind of all government ministries,
organizations, and agencies of the federal government; and
b) transfers, including to regional governments, governorates, and municipal and local
governments, including special budgetary funds.
5) The source of all receipts shall be specifically identified in the budget. All payments for the
budget year and commitments for future years shall be disclosed in the budget, and the nature
and duration of these commitments shall be limited as specified in the annual budget laws.
6) The difference between receipts (excluding borrowings) and payments (excluding
repayments of debt principal) is the budget surplus (if positive) or the budget deficit (if
7) Receipts consist of:
a) Tax revenues:
1. Petroleum tax revenues;
2. Non-petroleum tax revenues;
b) Non-tax revenues:
1. Petroleum non-tax revenues;
Non-petroleum non-tax revenues;
1) Social security contributions;
2) External grants;
c) Domestic and external borrowing;
d) Repayment of government lending;
e) Proceeds from asset transfers;
f) Transfers of surplus profits from the Central Bank of Iraq in accordance with the
relevant provisions of the Central Bank Law;
g) Transfers from public corporations;
h) Transfers from regional governments, governorates, and municipal and local
governments, including special budgetary funds.
8) Payments consist of:
a) Current expenditures, including for salaries and other allowances, outlays for goods
and services, current transfers, including pensions and social security payments, that
are paid in cash or have been issued in kind, interest payments and transfers in kind;
b) Capital expenditures for purchase of fixed assets, inventories, intangible assets,
financial assets, capital transfers that are paid in cash or have been issued in kind, and
c) Gross lending;
d) Repayment of external and domestic debt;
e) Other payments in accordance with the laws of the federal government;
Transfers to the Central Bank of Iraq in accordance with the relevant provisions of the
Central Bank Law;
g) Transfers to public corporations;
Transfers to regional governments, governorates, and municipal and local
governments, including special budgetary funds.
9) A Treasury Consolidated Account shall be established and maintained within the Ministry of
Finance. Subject to the transition provisions in Section 15, all receipts shall be credited to the
Treasury Consolidated Account and paid into the Treasury Single Account, and all payments
shall be debited to the Treasury Consolidated Account and withdrawn from the Treasury
Single Account. All federal budget receipts, commitments, expenditures, and other payment
transactions shall be entered into the Treasury’s General Ledger.
10) The Minister of Finance shall issue orders to open bank accounts and such accounts must
have a title that includes the words “federal government.” An authorized person may dispose
of federal government money only in accordance with this law and with regulations properly
promulgated by the Minister of Finance. An authorized person must not misapply,
improperly dispose of, or improperly use federal government money in contravention of this
Law. Violations of this Law are subject to applicable administrative and criminal penalties
under the legislation of Iraq, including Article 2(g) of Law Number 7 of 1958, Wastage of
Natural Resources and Squandering of Public Assets and Funds, and applicable provisions of
Law Number 111 of 1969, as amended, including provisions relating to bribery by public
officials, embezzlement by public officials, and officials who overstep the bounds of their
11) Subject to the monetary limits established by the Council of Ministers, the Minister of
Finance may waive the right of the federal government to collect an amount owing, postpone
the time of payment, or allow payment by installment only under the conditions and
procedures provided by law.
12) The Minister of Finance shall report each and every such written-off sum or postponement
to the Council of Ministers with the explanation for the write-off. This report shall be
submitted quarterly with a final summary report to be submitted with the annual final
accounts of the federal budget. These reports will be made publicly available.
13) The annual federal budget shall stipulate the use of the budget surplus or the means of
financing the budget deficit.
14) The budget deficit shall be financed by cash balances of the federal government, short-term
borrowings, domestic and external loans, or by the issuance of government debt securities.
Short-term borrowings may be used for the purpose of ensuring liquidity during a period no
longer than six months.
15) The annual federal budget shall be accompanied by documents that shall state the objectives
and operating rules for fiscal policy, including constraints on borrowing and federal
government debt, in accordance with the principles stated in Section 1 and with the
provisions in Section 6(1) of this law and following Section 7(1), and will report on progress
against these objectives.
Management of Petroleum Revenues
1) All proceeds from the sale of petroleum or otherwise derived from current and prospective
petroleum extraction, including from the federal government’s production shares and
royalties, and from the amount paid in respect of a right to explore for petroleum resources,
and any amount derived from the investment of amounts in the petroleum revenue account,
shall accrue to the budget. Except as provided in paragraph 2 of this section, below, or as
may otherwise be required by applicable United Nations Security Council Resolutions
(UNSCRs), the receipts from the export of petroleum shall be deposited into the
Development Fund for Iraq (DFI) account to be held in the name of the Central Bank of Iraq,
or a successor account to the DFI, hereafter generically referred to as the petroleum revenue
account, and reflected accordingly as receipts and transfers to and from the budget.
2) Pursuant to United Nations Security Council Resolution 1483 (2003), and subsequent related
UNSCRs, five percent (or such other percentage as may be determined by the United Nations
Security Council or jointly by the internationally recognized, representative government of
Iraq and the Governing Council of the United Nations Compensation Commission in
accordance with UNSCR 1483) of the receipts from the export of petroleum shall be
transferred to the Compensation Fund established in accordance with UNSCR 687 (1991)
and subsequent relevant UNSCRs and the balance of receipts from the export of petroleum
shall be deposited into the petroleum revenue account. These transfers to the Compensation
Fund will be shown in the budget.
Disbursements from the petroleum revenue account shall be restricted to disbursements
necessary to finance the budget, which shall include adequate provision for the government’s
obligations under any relevant UNSCRs or international law.
In the event that a successor account to the original DFI is established or the original DFI is
continued beyond the date of the transfer of governance authority to the Iraqi Interim
Government, the following will apply:
a) Operational responsibility for the petroleum revenue account will be with the Minister of
Finance, reporting to the Council of Ministers, which shall take advice from the Governor
of the Central Bank and such other individuals as the Council may deem appropriate.
The Council, in its discretion, may delegate responsibility for oversight of the operation
of the petroleum revenue account to a committee, which shall be composed of such
individuals as the Council may determine, and shall include, as a minimum, the Minister
of Finance, the Minister of Oil and the Governor of the Central Bank in an advisory
b) Disbursements from the petroleum revenue account require the authorizing signature of
at least two authorized persons, one of whom is an official in the offices supporting the
Prime Minister or Council of Ministers and reporting to the Prime Minister and the other
a permanent employee of the Ministry of Finance, designated by the Prime Minister and
the Minister of Finance, respectively. The persons to whom authority has been delegated
may not delegate to another person.
Any positive balance in the petroleum revenue account may be invested by the Minister
of Finance with the written consent of the Council of Ministers or the committee
mentioned in section 5(4)(a) of this law. Any amount so invested shall at all times remain
the property of the Government of Iraq. No contract or agreement that purports to
encumber the assets of the petroleum revenue account shall be enforceable, and the assets
shall continue to enjoy all privileges and immunities to the extent provided by UNSCR
1483, or as otherwise decided by the UN Security Council.
d) The activities of the petroleum revenue account shall be subject to external audit
conducted under the oversight of the Board of Supreme Audit, which shall act in
accordance with Law Number 6 of 1990 as amended by CPA Order Number 77
(CPA/ORD/18 April 2004/77), except as otherwise provided by relevant UN Security
5) The Minister of Finance shall make publicly available details of the petroleum revenue
account; including opening and closing balance, underlying assets, and summary of
movements, within three weeks of the end of each month. The Minister of Finance will
authorize a quarterly review of the investment position, and by the end of the month following
the end of each quarter submit a report on the results of the review to the Council of Ministers
or the committee mentioned in section 5(4)(a) of this law. The final report for each year will
detail each investment and enumerate the changes in the portfolio over the year and will be
made publicly available.
1) The preparation of the federal budget shall be based on the projections of economic
development, the pursuit of macroeconomic stability, economic policy, and applicable laws
and regulations, and shall be prepared with due regard to the desirability of ensuring the
sustainability of Iraq’s fiscal position, minimizing fluctuations in government spending,
and achieving efficient revenue collection. In particular, the preparation of the federal
budget will be based upon prudent and conservative forecasts for petroleum prices,
petroleum production, and tax and customs revenue. The projections shall be prepared by
the Ministry of Finance in consultation with the Central Bank and other Ministries in their
respective areas of expertise.
During the month of May of each year, the Minister of Finance, shall issue a report on the
priorities for fiscal policy for the next fiscal year, including the proposed total limit on
spending and the limits for each individual spending unit, and submit it to the Council of
Ministers for approval, together with the Final Accounts of the Federal Budget as
submitted to the Board of Supreme Audit according to section 11(6) of this law, and an
update on progress in execution of the budget in the current fiscal year. The Minister of
Finance shall consult with the Minister of Planning and Development Cooperation on
priorities, estimates of total funding, and procedures for preparing the capital spending plan
and current budgetary implications of capital expenditures, including those to be
implemented or financed by external sources.
In the month of June of each year, the Minister of Finance, in consultation with the Minister
of Planning and Development Cooperation, and based on the priorities for fiscal policy
established by the Council of Ministers, shall issue a circular setting guidelines and
objectives of fiscal policy for spending units for the preparation of their budgets. The
circular shall include key economic parameters, based on the macroeconomic framework
referred to in Section 7(1), the procedures and timetable for budget preparation, as well as
total levels of expenditure for each spending unit. This will serve as the basis for the
spending unit to prepare its budget request.
4) In the month of July of each year, spending units will submit requests, including the
information prescribed below, to the Minister of Finance for the allocation of funds. Copies
of requests for the capital portion of the budget will also be submitted to the Ministry of
Planning and Development Cooperation. Each request shall include:
a) The expenditure estimates for the budget year as prescribed in the economic
and functional classification systems determined by the Minister of Finance in
accordance with international accounting standards, including the value of
outstanding commitments for the current or prior year;
Consistent with the guidelines issued by the Minister of Finance, the
expenditure estimates for the year following the budget year (the “upcoming
fiscal year”) and to the extent permissible given conditions prevailing in Iraq,
for the two fiscal years following the upcoming fiscal year as prescribed in the
economic and functional classification system determined by the Minister of
Finance, in accordance with international accounting standards;
Estimates of personnel requirements for which budgetary funds are required;
Estimates of the requirements for other operating costs;
e) Multi-year commitments or multi-year payments, along with separately
prepared capital expenditures; and
Estimates of receipts from the core activities of spending units.
Estimates of the proportion of expenditures that would be due in foreign
The Minister of Finance may determine more specific requirements for the content and
format of the request.
6) The Minister of Finance, in consultation with the Minister of Planning and Development
Cooperation shall, on the basis of the estimates of revenue and submitted budget proposals
for the allocation of budget funds, and in the light of discussions with proposing Ministers,
determine estimated payments for spending units for the budget, as well as any amounts to
be included in the contingency reserve.
7) In the event of an irreconcilable disagreement during discussions on the draft annual
federal budget between the Minister of Finance and the Ministers responsible for spending
units, the Minister of Finance will note the disagreement and explain his proposed solution
in his submission of the draft annual federal budget. In determining the proposed solution,
the Ministry of Finance may consult with the Ministry of Planning and Development
Cooperation regarding the prioritization of capital expenditures. The Council of Ministers
may, within the agreed aggregate limit, adjust appropriations in accordance with their
collective priorities. Any increase in the aggregate spending limit must be based on a
proposal submitted by the Minister of Finance and approved by the Council of Ministers.
In the month of September of each year, the Minister of Finance shall prepare the draft
annual federal budget and submit it to the Council of Ministers for approval. The Minister
of Finance shall submit the budget by October 10th to the body vested with the national
legislative authority for approval.
1) In preparing the draft annual budget law the following shall be taken into account,
disclosed to the body vested with national legislative authority, and made publicly available
in the documents accompanying the budget law:
A statement of the objectives and operating rules for fiscal policy in
accordance with the principles stated in this law, and an explanation of how
these objectives relate to provisions in the annual budget law.
A comprehensive and consistent quantitative macroeconomic framework, and
the main assumptions underlying the budget, including the assumptions for oil
prices and oil production. To the extent permissible given conditions
prevailing in Iraq, the macroeconomic framework shall cover the budget year
and the subsequent three years;
c) New policies being introduced in the annual budget and their quantified fiscal
d) Major fiscal risks, quantified where possible, including variations in economic
assumptions and the uncertain costs of specific expenditure commitments,
including financial restructuring;
2) The draft annual budget law shall include:
The estimation of receipts in cash and in kind in accordance with economic
The estimation of payments in cash and in kind in accordance with economic,
organizational, and functional classifications;
c) The use of any surplus, and the financing of any deficit;
d) The contingency reserve, which shall be no greater than 5% of the non-
interest expenditures of the federal budget;
e) Clear specification of the rules for authorization of expenditure and limits to
expenditure. Limits on borrowing, issuance of government debt securities,
change in stocks of government debt securities, and guarantees consistent with
the Public Debt Law, and the authority granted to the Minister of Finance to
buy, redeem, or refund outstanding government debt securities;
and the draft budget law shall be accompanied by a report on the economic and
financial situation, including the assumptions, methods, and outcomes of the
economic projections on the basis of which the draft annual Federal budget law is
established, including actual revenues, expenditures, balance and total debt of the
general government for the past two years.
The body having national legislative authority has the right to reallocate proposed
spending and to reduce the total amounts in the federal budget. It also has the right to
propose an increase in the overall amount of expenditures to the Council of Ministers
if necessary, and provide notice of this proposal to the Minister of Finance. The
Minister of Finance will make a nonbinding recommendation to the Council of
Ministers with respect to this proposal.
4) If the federal budget is not approved by the body vested with national legislative authority by
December 31st, the Minister of Finance will, on a monthly basis, approve funds for spending
units up to 1/12 (one twelfth) of appropriations of the previous fiscal year until a budget is
approved. The funds so provided for can be used only for liquidation of existing
commitments, salaries, pensions, social security payments, and debt service.
The annual federal budget may be amended through a supplementary budget only on the basis
of a significant and unexpected change in economic circumstances or national priorities. The
supplementary budget must be determined by the Council of Ministers on recommendation
of the Minister of Finance and approved by the body vested with national legislative
authority. Should the Minister of Finance conclude that a supplementary budget is required,
he shall make appropriate recommendations, including on proposed total receipts and
payments, to the Council of Ministers. The Minister of Finance shall, within eight weeks
after recommending that the Council of Ministers adopt a supplementary budget, submit
details of the draft supplementary budget to the Council of Ministers for approval. The
Council of Ministers shall approve such recommendations, with any appropriate
modifications, within two weeks of receiving them. The draft supplementary budget, as
approved by the Council of Ministers, shall be submitted to the body vested with national
legislative authority within one week of such approval. The Minister of Finance shall issue
regulations and guidelines for the procedures to be followed in preparing the supplementary
6) The revenues and expenditures of special budgetary funds are to be reflected in the annual
The approved federal annual and supplementary budgets shall be published in the Official
Gazette and made publicly available in other media, as appropriate.
1) Each public corporation shall prepare its budget proposal, and after approval by its directors
and the competent minister, submit it to the Minister of Finance for review and final
approval. The budget should, among other things, show budgeted revenues, expenses, profits
or loss, capital expenditure, cash flows, borrowings, grants, transfers, contingent liabilities
including guarantees, and balance sheet. Any amendments to the budget shall also be
submitted to the Minister for Finance for review and approval. The Minister of Finance shall
respect the operational independence of public corporations.
2) The budgets of public corporations are not incorporated into the federal government budget
and are not incorporated into the budgets of any other level of government.
3) Public corporations shall submit by August 31st estimates of total loans and short-term
borrowings to be raised in the forthcoming fiscal year for approval by the Minister of
Finance. Public corporations will report monthly to the Minister of Finance on the amount of
loans and short term borrowings raised. Guarantees given by the federal government in
respect of public corporations borrowings shall be in accordance with law, and shall be
disclosed in the final accounts of the federal government.
4) All public corporations shall submit their monthly accounts to the competent ministry 10
days following the end of each month. All public corporations shall submit semi-annual
accounts to the Minister of Finance no later than July 15th. Each public company shall submit
its audited final accounts to the Minister of Finance no later than March 31st of the year
following the fiscal year ended. The final accounts shall include balance sheet, profit and loss
statement, cash flow statement, and notes to the final accounts covering, among other things,
accounting policies, revenues and expenses, assets and liabilities including borrowings,
commitments, and contingent liabilities. The final accounts shall be prepared in accordance
with international standards and shall be audited by an independent auditor.
The Minister of Finance is responsible for the execution of the federal budget.
2) No payments will be made from the Treasury Consolidated Account except under an
appropriation made in the annual budget or supplementary budget law, under a standing
appropriation of another Law, or to make an investment in terms of Section 5(4)(c) of this
3) Spending units will use the funds determined in the federal budget in accordance with a
spending plan that has been approved by the Minister of Finance.
4) Spending units may not commit to making expenditures that exceed the amounts allocated to
them, unless otherwise provided by the budget law.
5) Budget executors are responsible for ensuring that allocated funds within their spending units
are used for lawful purposes.
6) Appropriations for contingency reserve funds may be used for payments that are urgent and
that were unforeseen at the time the annual budget law was passed, if approved by the
Council of Ministers and the Minister of Finance. The Minister of Finance shall propose the
criteria for using reserve funds for approval by the Council of Ministers. All expenditures
from the reserve will be reported to the body vested with national legislative authority.
In accordance with regulations prescribed by the Minister of Finance, the spending units,
governorates, and special budgetary funds shall submit reports on realized receipts and
executed payments to the Minister of Finance within 30 days following the end of each
month. By the 15th of the subsequent month, the Ministry of Finance shall compile a
consolidated report on realized receipts and executed payments on the basis of the reports
submitted, and make it publicly available in the Official Gazette and other media, as
8) The Ministry of Finance can authorize the responsible Minister or Ministers, subject to the
provision below, to reallocate the approved budget appropriations from one spending unit to
another up to a limit of five per cent of the amount approved by the annual or supplementary
budget law for the spending unit that is to have its appropriation reduced. The following
a) No funds can be reallocated between a current expenditure of one spending unit and
the capital expenditures of another or between transfer payments of one spending unit
and other items, including salaries, goods, and services or capital expenditures, of
b) Spending units may, with the approval of the Minister of Finance, reallocate their
approved funds between line items by up to 5% of the total amount of funds
approved provided that no funds can be reallocated from capital to current
expenditures or between transfer payments and other current expenditures, including
salaries, goods and services. Virement from salaries or current spending to capital
spending of up to 5% may be permitted with the approval of the Minster of Finance.
c) A report of these transfers shall be prepared by Ministry of Finance and submitted on
a quarterly basis to the body vested with national legislative authority. A copy of
such report will be forwarded to the Minister of Planning and Development
Funds approved for spending units may be used only until the December 31st of the fiscal
year, except to the extent that goods and services have been validly ordered and received.
Receipts received after the end of a fiscal year will be recorded as receipts of the next fiscal
Borrowings and Guarantees
1) Federal government debt may be in the form of domestic and foreign loans, short-term
borrowings, and securities issues. The issue and redemption of securities shall be managed
by the Central Bank of Iraq as the agent for the federal government. The Ministry of Finance
and the Central Bank shall share information on government cash and borrowing needs and
current monetary conditions in order to ensure effective coordination of monetary and
Governorates and regional governments may, upon notification to the Minister of Finance,
raise funds through borrowings, and issue loan guarantees subject to the debt limit set in the
annual budget law, and to the specific debt limit set for each entity under the apportionment
approved by the Council of Ministers on a recommendation of the Minister of Finance.
Regional governments and governorates shall submit by August 31st estimates of total
outstanding borrowings, and borrowings to be raised in the forthcoming fiscal year for
review and for approval by the Minister of Finance. Regional governments and governorates
will report to the Minister of Finance monthly on the amount of outstanding borrowings
raised and loan guarantees issued.
The Ministry of Finance shall submit to the Council of Ministers for approval with the draft
annual budget law, the financial plan on loans, short-term borrowing, and the issuing of
guarantees by the federal government, governorates regional governments. In addition, the
Ministry will submit to the Council of Ministers a report any time that the plan must be
changed. Such changes must remain within the limits set by the budget. The Ministry of
Finance shall have the right, upon notification to the affected governorate or regional
government, to adjust the timing of the issuance of governorate or regional government debt
approved in the plan on the basis of macroeconomic and debt policy considerations.
4) The annual budget law shall determine the terms, conditions, and the limit on the annual
increase in the total existing federal government, regional government and governorate and
public corporation debt, and shall establish the total amount of guarantees to be issued by the
federal government, regional governments, governorates, and public corporations.
5) The federal government shall set limits for guarantees issued by regional governments and
governorates, but shall not guarantee them, unless explicitly provided in law.
6) The Minister of Finance shall sign the borrowing and guarantee contracts of the federal
government, and shall enter into a contract with the Central Bank for services required in
implementing all decisions on issues of securities.
7) The Minister of Finance shall maintain a record of all federal government debt. The
authorized body within the regional governments and governorates shall maintain a record of
existing regional government and governorate debt, loans granted, short-term borrowings,
and issued guarantees, and shall provide the Ministry of Finance with an updated record of
this information within 30 days of the end of each month.
The Minister of Finance shall prepare a consolidated report on all government debt within 90
days of the end of each fiscal year and shall make this report available to the public.
Internal Control and Accounting
Budget executors shall be responsible for the accounting and internal control of transactions
related to receipts, commitments, and payments of spending units and sub-units falling within
The Minister of Finance shall, on behalf of the federal government, have responsibility for the
accounting, internal control, borrowing, and debt transactions associated with the budget.
3) The Minister of Finance shall prescribe internal control arrangements, accounting procedures
and standards, submission of reports on the usage of budget funds, and the manner of
recording receipts, payments, and commitments.
The Minister of Finance may issue special orders to spending units, governorates, municipal
and local governments, and other budget entities for their submission of financial reports and
shall prescribe the submission of the Final Accounts of spending units, including regional
governments, governorates, municipal and local governments, and other budget entities.
5) The Minister of Finance shall submit to the body vested with national legislative authority by
May 31st and November 30th, quarterly reports on the execution of budget revenue,
expenditures, and financing for the quarters ending March 31st and September 30th,
respectively. This report will include the execution of budget revenue, expenditures and
financing of the federal budget. The Minister of Finance shall also submit to the body
vested with national legislative authority by August 31st of each year a mid-year report on
execution of budget revenue, expenditures, and financing for the half year ending June 30th.
This report will include detailed information on the execution of budget revenue,
expenditures and financing of the budget.
The Minister of Finance shall, by April 15th of the succeeding year, prepare the annual final
accounts of the federal budget, including special budgetary funds, and submit it to the Board
of Supreme Audit. The Board of Supreme Audit will provide an audit report on the final
accounts by June 15th. The Council of Ministers will submit final accounts and the related
audit report to the body vested with national legislative authority by June 30th.
7) The final accounts of the federal budget must be in accordance with the content and
classifications of the budget and international accounting standards, and shall include the
a) An external audit report from the Board of Supreme Audit in accordance with the
Board of Supreme Audit Law, as amended, and its established procedures;
The initial and final balance of the Treasury Consolidated Account and a summary of
movements for the year;
c) A report on differences between budgeted and executed receipts and payments and on
the financing of any deficit or the use of any surplus;
d) A report of all federal government borrowings for the year, and the total debt
outstanding, including any payment arrears;
e) A report of spending from the budget contingency reserves;
A report on federal government guarantees issued during the fiscal year;
g) The Minister of Finance shall prepare a report of all borrowings by regional
governments and governorates;
Outstanding amounts on capital contracts;
Retentions due on contracts;
Letters of credit entered into for which funds have been placed but for which goods
have not been received;
k) The Minister of Finance shall prepare a report on all guarantees by regional
governments and governorates.
8) Following approval of the final accounts of the annual federal budget by the body vested with
national legislative authority, the final account shall be published in the Official Gazette and
made publicly available.
Ministry of Finance Functions
1) The Ministry of Finance shall be responsible for, but is not limited to, conducting the
following treasury functions:
a) Executing all cash and non-cash payments on the basis of documentation and
data supplied manually or electronically by spending units, in accordance with
b) Maintaining the Treasury general ledger and subsidiary accounts;
c) Processing budget allocations to spending units;
d) Preparing the federal government’s final accounts;
e) Ensuring that no budget executor can exceed his annual appropriation;
f) Developing and managing the federal government’s accounting and financial
g) Providing regular financial reports as required;
h) Supporting analysis and improvements to the federal government’s financial
i) Making payments from the current and permanent reserves;
i) Managing the cash balances of the Treasury Consolidated Account and the
investment of the federal government’s surplus cash balances;
j) Managing the recording of domestic and external debt;
k) Managing the recording of international grants, assistance, and loans;
l) Preparing government accounting and financial management standards,
regulations, and related legislation;
m) Managing the opening, recording, and reconciliation of government bank
n) Managing the operations of the Regional Treasury Offices.
2) The Ministry of Finance shall be responsible for, but is not limited to, the following budget
a) Managing the process of budget preparation, planning and development,
including the preparation of macroeconomic and other economic advice;
b) Proposing guidelines for the preparation, planning, execution, revision, and
evaluation of budgets;
c) Preparing the annual budget law, any supplementary budget laws, and making
them publicly available;
d) Monitoring receipts and execution of payments, including petroleum revenues;
e) Preparing cash flow forecasts;
f) Providing advice to the Council of Ministers on requests by spending units for
the reallocation of appropriations and implementing decisions on reallocations;
g) Making payments from the current and permanent reserves.
h) Providing advisory support on budgetary issues to all spending units; and
i) Preparing reports on budget preparation and budget execution for international
j) Preparing regulations, instructions, guidelines and directions under this Law
and on amendments to this Law.
The Minister of Finance shall prescribe the manner and procedures by which Ministries,
spending units, and public corporations will undertake internal audits, and is responsible for
ensuring that the internal audit process is conducted in accordance with these rules and
2) Internal Audit performance consists of the following:
a) Providing regular assessments of the adequacy and effectiveness of the
Ministries’ decision-making processes, minimization of risk, and internal
b) Reporting significant internal control issues and improving the control
processes and information system in order to minimize risk in the decision-
c) Reviewing the efficiency and effectiveness of the use of existing services, and
proposing more efficient ways of providing these services;
Liaising with the external audit agency; and
e) Providing periodically information on the status of the execution of the annual
1) The federal budget and any supplementary budget shall be subject to annual audits by
the Board of Supreme Audit, according to the law.
In order to facilitate this audit, the Minister of Finance shall make available to the
Board of Supreme Audit:
a) The approved federal budget and any supplementary budgets, and any
b) The reported results of all internal audits;
c) The quarterly and annual reports on loans, borrowings, guarantees, and debt;
d) Final accounts of public corporations and the results of all audits;
e) Documents discussed by the Council of Ministers its role of oversight of
operations for any successor to the DFI, or by any committee delegated with
this role according to section 5(4) of this Law, as well as the results of any
internal audits; and
f) Any other documents, information and explanation requested by the Board of
Supreme Audit in connection with the performance of its audit functions.
To the extent that this Law is inconsistent with existing laws, the provisions of this Law shall
Regulations implementing this Law shall be approved within 12 months from the day of
enactment of this Law. Until these regulations are approved, existing regulations shall
continue to apply, to the extent consistent with this Law.
In transitioning to the Treasury Single Account, the Minister of Finance is hereby authorized
to close the accounts of the federal government Budget Accounts opened at the Central Bank
or in any other banks. Resources remaining in Federal Budget user accounts are to be
transferred to the Treasury Single Account and reflected in the Treasury Consolidated
Account. Until the closure of the existing bank accounts is completed and the Treasury
Single Account is fully established, the Minister of Finance is authorized to operate the
existing bank accounts on a zero-balance basis under which balances of these accounts will
be transferred to the Treasury Single Account on a daily basis. Should circumstances make
daily transfers impracticable, the Minister of Finance shall institute transfers as frequently as
Law Number 107 of 1985 on Consolidated Government Budget (as amended by Law Number
48 of 1990), and Law Number 20 of 1940 on General Accounting Principles shall not have
effect for the fiscal year 2005 and subsequent years.
5) The Minister of Finance is authorized to promulgate rules that will facilitate accurate financial
reporting during the period in which Iraq is undergoing the transition to international
accounting standards (“interim standards”). These interim standards shall apply only for the
fiscal year with respect to which they are promulgated. Reports prepared for these periods
that are otherwise required to comply with international accounting standards may comply
with either the interim standards or international accounting standards.
6) Unless otherwise provided by relevant UNSCR and the Transitional Administration Law,
including its Annex, prior to the establishment of a national legislature, the Council of
Ministers shall serve as the final approval authority for the federal budget, subject to the
approval of the Presidency. During such period, if the federal budget is not approved by the
Presidency and the Council of Ministers, the Minister of Finance will, on a monthly basis,
approve funds for spending units up to 1/12th one twelfth of appropriations of the previous
fiscal year until the budget is approved.
To the extent that the relevant UNSCR and the Transitional Administration Law, including its
Annex, attributes executive power to a body or person different than the Council of
Ministers, powers and responsibilities delegated to the Council of Ministers by this Law shall
be delegated instead to the executive body or person so identified in the relevant UNSCR or
the Transitional Administration Law.
Upon the transfer of governmental authority to the Iraqi Interim Government, the Program
Review Board established pursuant to Coalition Provisional Authority Regulation Number 3
(CPA/REG/18 June 2003/3) shall cease to perform budgetary functions for Iraq and shall
Entry into Force
This Law shall enter into force on the same date that the Order authorizing this law enters into
force. It shall apply to the budget of the fiscal year 2005 and subsequent years, and additionally,
following the transfer of governance authority to the Iraqi Interim Government, shall apply to
any supplementary budgets for fiscal year 2004.
PUBLIC DEBT LAW
For the purposes of this law, the terms below are defined as follows:
“Bank” means a bank as defined under the Banking Law.
“Government” means the entity exercising temporary governmental authority in
Iraq on the date this law enters into force and then the transitional Iraqi
administration upon the transfer to it of full governmental authority and the
recognition of the sovereignty of that administration by the CPA, and then the
internationally recognized representative government of Iraq once it assumes the
responsibilities of such authority.
“Government Debt Security” means a debt security issued by the Ministry of
Finance, including debt securities lawfully issued prior to the effective date of this
Law. The term “debt security” shall have the same meaning assigned to it in the
“Minister” means the Minister of Finance acting in an official capacity.
“Official Publication” means the Official Gazette or such other general publication
of wide circulation as specified by the Council of Ministers or its delegee.
“Owner” means the person registered as the owner of a Government Debt Security
on the books of the government securities registrar.
Authorities and Duties Pertaining to the Issuance of
Government Debt Securities
1. The Minister shall have authority to issue Government Debt Securities as an
obligation guaranteed by the Government only in amounts reasonably necessary
for expenditures authorized by law and in amounts necessary to buy, redeem, or
refund outstanding Government Debt Securities.
The issue and redemption of Government Debt Securities shall be managed by
the Central Bank of Iraq as the agent for the Government.
3. The Minister shall have authority to set the terms and conditions for
Government Debt Securities before they are issued, such as:
(a) the date of maturity;
(b) the offering price and interest rate;
(c) the method of computing the interest rate;
(d) the dates for paying principal and interest;
(e) whether a debt security is to be issued on an interest-bearing basis, a
discount basis, or an interest-bearing and discount basis;
(f) the form of the security;
(g) the currency in which the debt is issued; and
(h ) any other condition not prohibited by law.
4. The Minister shall have authority to determine how it will offer Government
Debt Securities for sale, such as by competitive auction and by subscription.
5. The Minister shall have authority to offer Government Debt Securities for sale
to any person.
6. The Minister shall deposit without delay all proceeds from the sale of
Government Debt Securities into the public treasury or an authorized depositary.
Section III Authorities and Duties Pertaining to Outstanding Debt
1. The Minister shall have authority to buy, redeem, or refund Government Debt
Securities in accordance with their terms and conditions using public funds.
2. The Minister shall have authority to give relief to owners of lost, defaced, or
destroyed Government Debt Securities in accordance with regulations issued by
3. The Minister shall pay principal and interest in legal tender when due, or earlier
in his discretion, in accordance with the terms and conditions of the Government
4. The Minister shall have a permanent and indefinite appropriation of public
funds for the purpose of buying, redeeming, or refunding Government Debt
Securities and for the purpose of paying interest on those securities.
Section IV Authorities Pertaining to Fiscal Agents and Depositaries
1. The Minister shall have authority to engage the Central Bank of Iraq, and any
other Bank, as a fiscal agent for the purpose of carrying out any function
authorized by this Law.
2. The Minister shall have authority to designate Banks that are eligible to act as
depositaries for any part of the proceeds from the issuance of Government Debt
Securities. The Minister shall have authority to prescribe conditions for the
deposit of public money, including the interest rate on amounts deposited.
3. The Minister shall have authority to transfer public money in a depositary’s
possession to the public treasury, and to transfer public money between
4. The Minister shall have the authority to require his fiscal agent and depositaries
to provide him with any information about their activities under this Law.
Section V Administrative Authorities and Duties
1. The Minister shall have authority to issue regulations, prescribe policies, and
issue announcements for the purpose of implementing this Law and carrying out
the Minister’s functions under this Law.
2. The Minister shall have authority to delegate his duties and functions under this
Law, except the power to delegate, to any person within the Ministry of Finance.
3. The Minister shall publish all regulations issued under this Law in the Official
4. Prior to any sale, the Minister shall list the terms and conditions applying to a
Government Debt Security in a regulation or an offering announcement. An
offering announcement shall be publicized in a manner that ensures wide
circulation among potential buyers.
5. If the Minister proposes to issue a regulation pursuant to this Law, he shall
publish a draft of the proposed regulation in the Official Publication. Along with
the proposed regulation, the Minister shall publish an explanation of the regulation
and provide at least thirty days after publication for the public to submit
comments. The Minister shall consider all comments received. If the Minister
determines that a final regulation is appropriate, the Minister shall issue the
regulation accompanied by a general description of the comments and his response
to those comments. The Minister may issue a final regulation without publishing a
draft or considering public comment if the Minister determines that the delay
involved would be a serious threat to the interests of the financial system or hinder
the effective conduct of monetary policy. In such an event, the Minister shall
publish an explanation of his decision to depart from the procedures in this
paragraph in the Official Publication.
6. The Minister shall maintain a system of books and records
(a) describing all issued Government Debt Securities;
(b) identifying the dates when outstanding obligations come due; and
(c) stating all amounts of principal and interest paid on Government debt
7. The Minister shall make all its books and records pertaining to Government
Debt Securities available for inspection upon request by the Prime Minister and
Council of Ministers or its delegee.
8. On or before the end of the fiscal year, the Minister shall submit a report to the
Prime Minister and Council of Ministers on the public debt activities of the
Ministry of Finance. The report shall include, at a minimum:
(a) A table showing the public debt from all outstanding Government Debt
Securities as of the date of the report, the interest cost for that debt in the current
year, and the projected interest cost for government debt over the next five fiscal
years, taking into account projections for the budget.
(b) A table showing the maturity distribution of the public debt from all
Government Debt Securities outstanding as of the date of the report.
(c) An explanation of the overall financing strategy used in determining the
distribution of maturities and interest rates for Government Debt Securities issued
during the current fiscal year.
Section VI Final Provisions
1. Any provision of Iraqi law that was enacted prior to the effective date of this
Law and that is inconsistent with this Law is hereby superseded.
2. This Law shall enter into force on the same date that the Order authorizing this
Law enters into force.