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Iraq’s oil revenue could double this year to $79 billion — helped by rising oil prices — but if the past several years are any indication, the government will be slow to use it to rebuild the country, a report shows.

The Baghdad government has amassed a huge surplus, keeping about $30 billion in the Federal Reserve Bank of New York, according to the report issued Tuesday by the Government Accountability Office.

From 2005 to 2007, the Iraqi government generated about $96 billion in cumulative revenue, virtually all of it from crude oil export sales, the GAO says.

Ninety percent was spent on operating expenses, such as salaries and goods and services, and 10 percent on investments such as structures and vehicles.

Only 1 percent of total expenditures went toward maintaining Iraq and U.S.-funded investments such as buildings, water and electricity installations, the report says.

For 2008, the GAO estimates that Iraq could spend up to $35.9 billion of its $49.9 billion budget, raising the overall surplus to around $50.3 billion. A proposed $22 billion supplemental budget could reduce the surplus.

Since fiscal 2003, the U.S. has appropriated about $48 billion for stabilization and reconstruction efforts in Iraq, including $23.2 billion on security, oil, electricity and water.

"The Iraqi government now has tens of billions of dollars at its disposal to fund large scale reconstruction projects. It is inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves," U.S. Sen. Carl Levin, D-Mich., who asked for the GAO report along with Sen. John Warner, R-Va., said in a statement.

Levin hopes to tighten rules on U.S. reconstruction spending in the next defense authorization bill, Levin spokeswoman Tara Andringa was quoted as saying by CNN.com.

U.S., coalition and international officials say Iraq’s spending on rebuilding is hampered by "a shortage of trained staff, weak procurement and budgeting systems, and violence and sectarian strife," according to the report.

In addition to the need to rebuild, Iraq faces a sizable amount of foreign debt, including $29 billion in war reparations to Kuwait, the report says. Oil revenue currently cannot be used to repay debt but that exception is expected to expire in December.

"Yes, there are problems, but that does not mean these problems are going to continue," Sinan al-Shabibi, governor of the Central Bank of Iraq, told The New York Times. "In all developing countries you put objectives, and sometimes you don’t reach them."

But he said the government is "determined to spend this money on development. They see it as a priority."


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