/www.fxserver.com/ Iraqis are unlikely to get a new currency until well after a new Iraqi authority is formed and US plans to give emergency one-off $20 payments to civil servants will grease the economy with dollars in the meantime.
US officials said the dollar payments will be critical to getting the economy moving again and Iraqis will have to cope with a hotch-potch of currencies including the dollar, other western currencies and the Saddam-era dinar for some time.
"Our number one goal is to try to let economic activity begin to happen as quickly as possible," said one of two US officials briefing reporters yesterday on condition of anonymity.
The likely delay in introducing a new currency raises the risk of setting off inflation, dollarising the economy or even driving some Iraqis into northern Kurdish-controlled areas where a more stable pre-Saddam Hussein dinar is used, analysts say.
The officials, assessing the economy for the US-led administration that will rule until Iraqis take over, said that within days the administration would start to pay Iraqi civil servants a $20 per head emergency payment and could repeat such payments as necessary.
"This is not an issue of dollarising the economy, but to get money into desperate people's hands that has real value," one of the officials said.
The official also said it was very important for the United Nations to move to quickly to remove sanctions imposed on Iraqi in 1990 to allow goods to move more freely into the country.
As the previous government had failed to publish any statistics or records, their best estimate was that 1.5 million to 2.5m Iraqis worked for the government. The total population is estimated at 26m.
"We're talking about most working people. They will be entitled to get an emergency payment of $20, in dollars," one official said.
Payments will go to Iraqis who are able to identify themselves as civil servants to US officials.
The United States will partly use $1.7 billion in seized Iraqi assets for the $20 emergency payments, for salaries once they resume, and to build up foreign exchange reserves, one of the officials said.
Analysts have said there was a risk that lack of currency reform could cause inflation to spiral out of control.
"The calamity, whatever it is, will have destroyed many real physical goods in the country such as food stocks ... but the money will probably still be there," said veteran economist Khalid Ikram, a former World Bank official.