"The Iraqi cabinet has decided to exempt government employees with salaries lower than 700,000 Iraqi dinars from the income tax, which amounts to 10% of the monthly payment," said Zubaydi in a joint press conference with Iraqi Minister of Planning Ali Baban in Baghdad.

Zubaydi expected the decision to improve civil servants' salaries, criticising the "dollarisation" of Iraqi traders and businessmen's use of dollars and euros instead of the national Iraqi currency.

"It is a painful and harmful disease in the Iraqi economy," Zubaydi regretted, pointing out his ministry has been fighting the phenomenon through various economic policies.

He noted the Ministry of Finance increased the interest, leading to augmented bank savings.

"Al-Rafidayn bank upped the interest rate from 4% in the past to about 12-14%, which would encourage the people to save their funds in banks," he said.

He added the Aqari (real estate) bank has started giving loans to people, offering an opportunity for activating 25 types of workers.

He indicated that these policies managed to lower unemployment from 70% to 20% and inflation from 60% to 20% in 2004-2005, noting the government embarked on policies encouraging the private sector and fighting unemployment.

eanwhile, Baban said the new budget allocated $10 billion dollars to subsidise ration card items and the salaries of government employees and pensioners.

"There are extensive studies to set five-year plans in which the investment budget increases at the expense of government subsidy," said the Minister of Planning, stressing the need to have "The government subsidy, a wrong practice imposed by the current abnormal state of affairs in Iraq, decreased."

Baban said the future plan of his ministry aimed at eliminating unemployment and extending subsidy to the worthy poor groups in Iraq.

Source: Voices of Iraq