Saddam Hussein is out of power - and soon his face will be gone from the pockets of millions of Iraqis.

The back and front of a current Iraqi 250 dinar note is seen in this Monday, July 7, 2003 picture. The bills bearing Saddam's likeness will be swapped beginning Oct. 15, and that the old notes will be out of circulation by early 2004. [Reuters]

L. Paul Bremer, the US civilian administrator of Iraq, said in a national address that bills bearing Saddam's likeness will be swapped beginning Oct. 15, and that the old notes will be out of circulation by early 2004. He also announced approval of a $6.4 billion budget for the remainder of 2003, and establishment of an independent Central Bank.

"The officials who used to steal most of Iraq's resources, and misuse what little was left, have gone," Bremer said in the address Monday. "All of Iraq's resources will now be spent on you, the Iraqi people."

The new bills will be based on a design used in Iraq before Saddam's 1990 invasion of Kuwait and do not feature Saddam's face. Bremer said Iraqis will have until Jan. 15, 2004, to exchange the bills before they are phased out. The bills will be exchanged at a one-to-one parity. The pre-1991 bills are still the currency of choice in most of the Kurdish-controlled north, and are also available elsewhere.

Coalition officials, speaking on condition of anonymity, said their primary goal in changing the currency was not to remove Saddam's face from the bills, but rather to improve liquidity.

A severe shortage of Iraqi dinars - compounded by the rejection by many Iraqis of the 10,000-dinar note issued just before the war - led US administrators in June to order the printing of millions of new 250-dinar notes, even though they bore Saddam's likeness. The coalition continues to print millions of the old bills every day.

Coalition officials said they expected volatility on Iraqi exchange markets in coming days. The Iraqi dinar's value has varied widely, dropping as low as 3,000 to the dollar during the war before recovering. It is currently trading at about 1,400 to the dollar.

The new bills will be available in six denominations ranging from 50 dinars (about 4 cents) to 25,000 dinars ($18), making it easier for Iraqis to do business. Currently, Iraqis must carry around huge wads of 250-dinar notes, each worth less than a quarter.

Bremer said the notes will have different colors and denominations from the old bills, and will be harder to counterfeit.

Tony Fratto, a spokesman for the Treasury Department in Washington, said it was "a very positive development for the Iraqi economy to have a single currency throughout the country."

Before the Gulf War, Iraqi dinars carried various images - a 5-dinar note had a picture of a statue of King Hammurabi of Babylon, a 10-dinar note showed a drawing of Baghdad's founder and a 25- dinar bill depicted three Arabian horses.

Coalition officials said leaflets explaining the swap will also be distributed on Iraqi streets. With electricity in the capital and other parts of the country still sporadic, it was not clear how many Iraqis were able to view Bremer's speech.

Bremer said half the 2003 budget will come from oil revenues. Other money will be drawn from the billions in Iraqi assets that were frozen overseas during Saddam's reign, and from the hundreds of millions of dollars in cash found during raids on palaces belonging to Saddam and his sons.

In addition to the national budget, Bremer said $3.2 billion will be provided by the United States to pay for Iraq's reconstruction.

He said the budget includes $250 million to improve security and justice, $314 million to upgrade the power supply, as well as significant outlays on telecommunications, water and sewage improvements and public health.

Iraqis have been deeply disappointed by the coalition's inability to provide security, and by a lack of basic services like electricity and water. Phone service was also almost completely knocked out in the US-led war, and officials say it will take months to restore it.

The decision to make the Central Bank independent was effective immediately, coalition officials said. They said an interim Central Bank governor will have the same relationship to Bremer as Alan Greenspan, the chairman of the US Federal Reserve, has to President Bush.

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