Spc. Derek Del Rosario
Task Force Baghdad PAO
CAMP LIBERTY, Iraq --- Iraqi contractors supporting Operation Iraqi Freedom 3 are now counting dinar instead of dollars on payday.
Another milestone in the country's economic development was reached Oct. 14 when a 3rd Infantry Division finance office issued the first payment in Iraqi currency while in theater.
Local vendors and contractors were previously paid in U.S. dollars. This is the first time in all the rotations of Operation Iraqi Freedom that a dinar check payment has been issued to local vendors and contractors within the Baghdad area of operations.
This is a huge step according to Maj. Richard Santiago, commander of 3rd Finance Company, 3rd Soldier Support Battalion, Division Support Brigade, who said paying locals in dinar benefits both the Iraqi people and Coalition Forces.
"This is truly a win-win situation for all," Santiago said. "Issuing dinar check payments improves the economic and financial stability of Iraq by promoting the Iraqi banks while using their local currency. It also decreases the cash requirements our finance offices need in order to meet mission requirements, as we are now able to pay the local vendors and contractors with a check instead of cash."
Implementing the dinar payment took a lot of coordination between several agencies. The 18th Soldier Support Group, the Defense Finance and Accounting Service, the Office of the Assistance Secretary of the Army (Financial Management and Comptroller), the U.S. Treasury Department and the 3rd Finance Co. were all involved.
"We needed approval from DFAS to set up a Local Depository Account at the Credit Bank of Iraq in order to be able to make payments using the local currency," Santiago said. "Once we had the LDA Account set up, we were ready to make check payments in dinar. Setting the LDA account at the Credit Bank of Iraq will stimulate their bank systems and procedures, creating the right impact needed to improve Iraq's financial infrastructure."
Santiago foresees the banking system in Iraq will increasingly show signs of improvement as Army finance offices continue to make payments in the local currency.
"The ultimate goal is to have all the local vendors and contractors paid in dinar while maximizing the use of the local banking system," Santiago said. "It's difficult to estimate when we will reach this point, but just to disseminate funds in their currency is a major step in the right direction."
Iraqi vendors and contractors are likely to appreciate the change from payments in U.S. dollars to dinar because it will help their economy, said 1st Lt. Tayonia Williams, 3rd Finance disbursing officer.
"Paying Iraqis in their own currency also has the benefit of limiting the large amount of cash that vendors and contractors have to carry after getting paid for their supplies and services," Williams said.
Santiago said the switch to dinar will also help the Coalition Forces fight against terrorism, as it will limit money that could be used by terrorists.
"By limiting the U.S. dollars in the region, we are cutting down the dollars that could possibly be used by insurgents," Santiago said. "These steps are setting the right path for the rebuilding of Iraq."