The surprise announcement by Iraqi Finance Minister Kamel al-Kilani dominated the second day of meetings organised by the International Monetary Fund in Dubai.

The recently-appointed minister unveiled a string of reforms that analysts said read like a manifesto devised by Washington, signing off 30 years of Saddam Hussein and the socialist Baath Party.

Mr Kilani said liberalisation of foreign investment, the banking sector, taxes and tariffs would "significantly advance efforts to build a free and open market economy in Iraq".

But the BBC's Nick Springate, in Baghdad, says many ordinary Iraqis will see the moves as a big sell-off with predominantly multi-national, American companies viewed as getting "rewards".

The American administration in Iraq is likely to play a role in overseeing the privatisation process, along with the Iraqi Governing Council, our correspondent says.

A number of the people on the council themselves have financial backgrounds and business backgrounds, and will have strong views about who should be coming into the country.

But former US President Bill Clinton, on a visit to Dubai, urged moderation from American firms.

"We should play a role and spend a lot of money there, but we shouldn't dominate," Mr Clinton said.

But US Treasury Secretary John Snow rejected the suggestion that US had dominated the drafting of the reforms, saying they were the "proposals, ideas, and concepts of the Governing Council".

The scale of rebuilding needed in Iraq is likely to attract many investors hoping to secure multi-million dollar contracts, not least from the construction industry.

Many roads and buildings in Iraq need to be repaired or rebuilt.

Telecommunications is also a major factor, our correspondent says.

Although mobile-phone contracts are going to be awarded in the next couple of weeks, even before the fall of Saddam Hussein telecommunication companies were very prevalent, bidding to rewire the country and bring in new technology.

The changes - set to be implemented in the next few weeks - will allow foreign banks to buy Iraqi financial institutions, while the central bank itself will become independent.

Foreigners will be able to take over businesses and industries that were previously state-controlled.

The most lucrative part of the Iraqi economy - oil - is not included in the reforms.

Natural resources are exempt from the changes, excluding current outside participation in Iraq's oil reserves.

There is widespread belief in the Arab world that the US military action in Iraq earlier this year was motivated by a desire to control Iraq's substantial oil reserves.

Other measures announced:

The central bank will have full independence and investors will be allowed full transfer of foreign exchange earnings.

Under new bank rules, six foreign banks will be allowed "fast-track" entry into the country and will be permitted full ownership of the local banks within five years.

The reforms also see a new maximum tax rate of 15% for both individuals and companies.

A 5% surcharge will also be imposed on all imports, with the exception of humanitarian goods such as food and medicine.
The World Bank said on Saturday that a full assessment of Iraq's long-term economic needs should be ready within two to three weeks.

http://news.bbc.co.uk/2/hi/middle_east/3126522.stm