US urges Iraq to seize chance to revive economy

WASHINGTON (Reuters) - Iraq must seize on the opportunity created by improved security to push ahead with economic reforms and Washington will help by sending more technical experts, a U.S. Treasury official said on Friday.

After a two-day visit to Baghdad, David McCormick, Treasury undersecretary for international affairs said Washington would increase the number of technical economic staff helping the Iraqi government with this from 4 to 12.

"There is a universal recognition that there is a window of opportunity on the economic reform side that has been created by the improvement in the security situation," McCormick said.

"It is particularly critical that the Iraqi leadership seize the opportunity that is provided on the economic side... whether we're talking about investment, budget execution or reform," he added.

The amount of violence in Iraq decreased last year after President George W. Bush sent in thousands of extra troops. This created hope that more attention could be paid to reviving the economy after years of mayhem prompted by the 2003 U.S.-led invasion.

McCormick said Iraq had met economic targets under an International Monetary Fund program in the past year. But more progress was needed, especially on improving budget spending, tackling corruption and rebuilding the banking sector to support private sector investments.

McCormick praised the Iraqi government for expressing an interest in a global program, the Extractive Industries Transparency Initiative, EITI, that encourages transparency in oil and mining sectors in developing countries.

He said the Iraqis also had established an investment commission to move forward an ambitious public investment program hampered by violence plaguing the country last year.

"There is a recognition of the need to bring further clarity and transparency to the investment climate in Iraq," McCormick added.

(Reporting by Lesley Wroughton; editing by David Storey)