Iraq bans cash payments for essential food items

Cash buying of sugar, rice, wheat barred in bid to curb corruption, says government
Iraq bans cash payments for essential food items
Iraq intends to phase out its food ration programme by the end of the year
By Reuters
Mon 30 May 2011 09:41 AM

Iraq's trade ministry has cancelled direct cash purchases of
essential food items, such as sugar, wheat and rice, as a measure to halt
corruption, Deputy Trade Minister Sweiba Mahmoud said on Sunday.

The move was announced as a 100-day target set by Prime
Minister Nuri Al Maliki to improve his fragile coalition government's
performance in the face of popular protests against shortages and corruption
neared its early June deadline.

Although direct cash food purchases were being halted, Iraq,
one of the world's largest grain importers, would continue to hold public and
selective tenders to supply its food needs.

Most of the essential food items imported for the national
monthly food ration programme had come from direct cash purchases, a ministry
source said.

Mahmoud told a news conference the bulk of corruption
problems in the country's food supply channels had been experienced in the area
of direct cash purchases.

"There was a mechanism of cash purchase in the trade
ministry and this mechanism has been cancelled," she said.

Like other countries in the Arab world, Iraq, its
oil-dependent economy battered by war and sectarian violence since the 2003
US-led invasion that toppled Saddam Hussein, has faced protests this year by
citizens angry about corruption and a lack of public services and jobs.

This included complaints about the monthly food ration
giving Iraqis supplies of rice, cooking oil and other staples.

Iraq consumes around 4.5 million tonnes of wheat a year, 1.2
million tonnes of rice, and 780,000 tonnes of sugar annually.

Maliki, who is under pressure from the protests and over the
scheduled withdrawal by the year-end of the last remaining US troops in his
still volatile country, has said he will sack ministers if his cross-sectarian
administration does not improve its performance. Critics say it is he who
should resign.

Mahmoud said Iraq had enough sugar in stock to last until
September. "We have enough reserves in the trade ministry warehouses to
cover requirements until the end of September," she said.

She added the government intended to phase out the food
ration programme by the end of 2014, keeping it only for the most needy. This
would give more of a chance for the private sector to import national food requirements.

The ministry had requested a total budget allocation for
2011 of 7 trillion dinars ($6bn), but had only received 4 trillion ($3.4bn) so
far, which was just enough to cover the food ration programme needs until the
end of September.

Mahmoud said the deficit in relation to the total
requested had slowed the ministry's performance, but it expected to receive a
supplementary budget from oil revenues.

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