time government since the fall of Saddam Hussein. U.S. Defense Secretary Donald Rumsfeld said earlier on Friday that around 7,000 troops would return home early next year. The IMF voiced guarded optimism for the future but made plain that delivering security was essential. "The medium term outlook for Iraq is favorable, but subject to many risks. A strengthening of the security situation will help the authorities to implement the program. Moreover, Iraq remains vulnerable to shocks, particularly those relating to oil," the IMF's Kato said. Iraq also concluded a debt-for-debt exchange offer on Friday with the largest claimants against the former regime, worth about $14 billion, said Ernst & Young, Iraq's debt reconciliation agent. This represents about 60 percent of all the commercial claims registered with the firm. Under the offer, Iraq grants anyone with a claim of $35 million or more the chance to swap for either privately placed notes or an interest in a multi-currency loan. Claimants swap at a rate of 20 percent of the value of their original holding. The new notes mature in 2028 and carry a 5.8 percent fixed coupon. "This will allow the country, both the government and the private sector, to begin the process of reintegrating itself into the international financial markets," said Bill Rhodes, senior vice chairman of Citigroup, one of the arranging banks. --SP 01 26 Local Time 22 26 GMT
