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Iraqi finances taking shape: bank, budget, no Hussein

Saddam Hussein is out of power, and soon his face will be gone from the pockets of millions of Iraqis.

L. Paul Bremer, the U.S. civilian administrator of Iraq, said in a national address that bills bearing Hussein's likeness will be swapped beginning Oct. 15 and that the old notes will be out of circulation by early 2004. He also announced approval of a $6.4-billion budget for the remainder of 2003 and establishment of an independent Central Bank.

"The officials who used to steal most of Iraq's resources, and misuse what little was left, have gone," Bremer said in the address Monday. "All of Iraq's resources will now be spent on you, the Iraqi people."

The new bills will be based on a design used in Iraq before Hussein's 1990 invasion of Kuwait and do not feature his face. Bremer said Iraqis will have until Jan. 15, 2004, to exchange the bills before they are phased out. The bills will be exchanged one to one. The pre-1991 bills are still the currency of choice in most of the Kurdish-controlled north, and are also available elsewhere.

Coalition officials said their primary goal in changing the currency was not to remove Hussein's face from the bills but to improve liquidity.

A severe shortage of Iraqi dinars led U.S. administrators in June to order the printing of millions of new 250-dinar notes, even though they bore Hussein's likeness. The coalition continues to print millions of the old bills every day.

Coalition officials said they expected volatility on Iraqi exchange markets in coming days. The Iraqi dinar's value has varied widely, dropping as low as 3,000 to the dollar during the war before recovering. It is currently trading at about 1,400 to the dollar.

The new bills will be available in six denominations ranging from 50 dinars (about 4 cents) to 25,000 dinars ($18), making it easier for Iraqis to do business. Currently, Iraqis must carry around huge wads of 250-dinar notes, each worth less than a quarter.

Bremer said the notes will have different colors and denominations from the old bills, and will be harder to counterfeit.

Tony Fratto, a spokesman for the Treasury Department in Washington, said it was "a very positive development for the Iraqi economy to have a single currency throughout the country."

Bremer said half the 2003 budget will come from oil revenues. Other money will be drawn from the billions in Iraqi assets that were frozen overseas during Hussein's reign, and from the hundreds of millions of dollars in cash found during raids on palaces belonging to Hussein and his sons.

In addition to the national budget, Bremer said $3.2-billion will be provided by the United States to pay for Iraq's reconstruction.

He said the budget includes $250-million to improve security and justice, $314-million to upgrade the power supply, as well as significant outlays on telecommunications, water and sewage improvements and public health.