The Oil Products Distribution Company confirmed, on Monday, that electronic payment constitutes 65% of the company’s revenues, indicating the intention to generalize it in all governorates.
The Director General of the Oil Products Distribution Company, Hussein Talib, said in a statement reported by the official news agency, and reviewed by “Al-Eqtisad News”, that “electronic payment is one of the pillars of the government program, and the Oil Products Distribution Company played a role in it by using it to fill fuel and purchase its products by citizens.”
He added, “Work is continuing to enhance the electronic payment file by adding full automation to the distribution sector.”
He continued, “The Oil Products Distribution Company is the first government company to initiate electronic payment, as it began the trial operation of electronic payment in 2023, and once it was completed, it was launched in all governorates.”
He revealed that “electronic payment revenues for last August amounted to 615 billion dinars out of a trillion of total sales, and with these figures, electronic payment constitutes 65% of the revenues of the Oil Products Distribution Company.”
He pointed out that “electronic payment for fuel purchases has been implemented in Baghdad and we are moving towards generalizing it in the rest of the governorates, starting with Nineveh, and we are determined by the end of this year to complete our drawn-up plans by equipping all fuel filling stations with electronic payment devices and ending cash transactions.”
I'm not saying they're going to devalue the currency right now.
What I am saying is if they stay below $70 [per barrel of oil] for the medium term, you can see them devalue the currency. I don't think it's going to happen anytime this year because the year is almost over.
I'd be a little nervous going into 2025.
PIMPY CC NOTES HIGHLIGHTS: "THE NECESSARY STEPS FOR IRAQ TO REINSTATE THE DINAR RATE AT $3.22" BY PIMPY, 16 SEPT
Summary
Pimpy discusses the necessary steps for Iraq to reinstate the $3.22 dinar rate, emphasizing economic reforms and stability.
Highlights
💼 Monetary Reforms: Iraq needs comprehensive monetary reforms to stabilize its economy.
💵 Currency Basket: Adopting a basket of currencies will reduce reliance on the US dollar.
🚜 Economic Diversification: Iraq should diversify beyond oil to strengthen its economy.
📈 Foreign Investment: Attracting foreign investment is crucial for economic recovery.
⚖️ Political Stability: A stable political environment fosters confidence in the dinar.
📊 Inflation Control: Monitoring and controlling inflation is essential for maintaining currency value.
🏦 Engagement with Institutions: Collaborating with international financial institutions can support necessary reforms.
Key Insights
💡
Monetary Reforms: Implementing monetary reforms, including deleting zeros from the currency, can help restore public confidence and stabilize the economy. This is a long-discussed yet crucial step for Iraq’s financial health.
🌐 Currency Basket: By adopting a currency basket system, Iraq can mitigate risks associated with dollar fluctuations, providing a more stable foundation for international trade and enhancing economic resilience.
📉 Economic Diversification: Reducing oil dependency is vital. Recent agreements with Turkey on agriculture infrastructure can potentially boost Iraq’s agricultural sector, indicating a step towards diversification.
📈 Foreign Investment: Iraq must create a favorable environment for foreign investors through regulatory reforms, which is essential for economic growth and stability.
🔒 Political Stability: Ensuring political stability is key to building trust among citizens and investors alike, which will lead to increased usage of the dinar over foreign currencies.
📉 Inflation Control: The Central Bank’s role in controlling inflation through effective monetary policy is vital for maintaining the dinar’s value, currently facing a 5% inflation rate.
🤝 International Engagement: Collaborating with organizations like the IMF can provide Iraq with guidance and financial support to implement necessary reforms, aiding in achieving its monetary goals.
The Executive Director of the Iraqi Private Banks Association, Ali Tariq, confirmed on Sunday that “the number of electronic payment points in government institutions and shops has increased from 7,000 to 30,000.”
Tariq said, in a statement reported by the “Rudaw” media network, and reviewed by “Al-Eqtisad News”, that “the financial and banking sector, electronic payment companies and other financial institutions in Iraq need to have a greater impact on the lives of citizens in terms of financing or using electronic payment tools and developing them.”
He added that “the Central Bank of Iraq is currently working on a major plan to reform the banking sector in general, whether governmental or private.”
He noted that “the focus in the next phase will be on developing and improving these services to strengthen the Iraqi banking sector, protect depositors’ money and develop the electronic payment system, which contributes significantly to reducing the risks of using cash, whether from damage or forgery, as well as protecting the financial system from money laundering and financing terrorism.”
As for deposits, he confirmed that they are “continuously increasing, whether in government or private banks, and that lending and loans are also continuously increasing.
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Regarding the use of electronic payment tools, he said that “in the last two years the percentage has been very high, in the last year alone about two million electronic payment cards were issued in Iraq, increasing the number to 20 issued cards.”
Regarding the payment devices that we see in shops and government institutions, he pointed out that “they have increased from 7,000 payment points to more than 30,000, and the total transfer of funds via electronic payment last month between financial institutions reached nearly 2 trillion Iraqi dinars.”
The Executive Director of the Iraqi Private Banks Association confirmed that reliance on the banking sector, especially in light of the transfer system to finance foreign trade, “was organized differently than before, and at the end of this year there will also be a shift in the external transfer process to rely more on correspondent banks than the platform in its current state.”
Regarding the collection of government services, he said that “recently there has been a very large acceleration and doubling in the level of government collection.”
He added that “before June 2023, there were about 50 government institutions with their departments that had at least one electronic payment window, but today the number has exceeded 600 payment windows, which makes it easier for citizens to pay faster.”
In the context, he stressed that “many banks rely on digital services and applications throughout Iraq and the Kurdistan Region, which has witnessed significant development in terms of the use of digital services.”
Regarding transferring money abroad, he explained that if “the issue is related to personal transfers, there are specific outlets or ceilings for these transfers.”
In this regard, he said that “the transfer process will be more organized and monitored by correspondent banks in which Iraqi banks have accounts to ensure real transfers and monitoring that facilitates the process of transferring money for merchants outside Iraq.”
...They don’t need any economic revival to put a fair market rate for the dinar back on FOREX. It is all a lie....They are “artificially” suppressing the rate of the dinar.When will this abuse of the dinar end? I believe this end is near...
Mnt Goat
... there are not any of the newer lower denominations out in circulation in Iraq...if the newer lower denominations were already in circulation...Without the revaluation of the dinar at least inside Iraq, the economy would crash because the money would be totally worthless
...How could anyone...buy anything with the newer lower denominations dinar notes without first a revaluation? It would take truck loads of money just to buy groceries...the CBI would have formally announced the Project to Delete the Zeros as this is the ONLY way the lower denominations can come out...There will be NO SECRET when they come out...The project to delete the zeros has NOT yet begun.
EXCERPTS FROM MNT GOAT : A CONVERSATION WITH MU CBI CONTACT
I first want to tell you about my conversation with my CBI contact yesterday, Thursday.
I know, I know I am late in posting my Newsletter but I am working two jobs now and it is hard to even keep my eyes open some days at night while I compose this news for YOUR viewing, not mine, since I already know the information.
My contact told me that the committee has been put on notice that the Project to Delete the Zeros may go forward this fall but not until the US elections are over.
There will have to be a downfall of the current administration in power to make this happen. She told me that they listen to the propaganda from these RV intel sites and its all just lies. Its all just over speculating and nothing will ever come of it.
The Project to Delete the Zeros will initiate the process that will lead to the reinstatement. She also said that the WTO is waiting for the necessary changes in the Investment Law as it is held up in the GOP to discuss kickback comments from the parliament. So there is still work to be done on this bill too.
Next I asked again about the Oil and Gas Law. I was told that the US will absolutely NOT agree to release the reinstatement until this law is passes and protects the oil revenues. The good news is that Iraq recently told us that the non-oil revenues are right on track where they need to be at this time and the economy is progressing accordingly. I was told the safeguards against inflation and downturns are in place. So, I have to tell you that reading some of these articles we get mixed messages. But she told me that these are lies again from the far left in Iraq who still want to portray Iraq in a backwards state the not the real Iraqi economy. Keeping Iraq suppressed gives them enormous power, a power base that is slipping away. Even now with all the success of Al-Sudani, they are discouraging against early elections and I believe they are going to give Al-Sudani a full four year term. This is all wonderful news.
Electronic Payment Systems Strengthen AML Compliance
The Central Bank of Iraq (CBI) has acknowledged the significant role of electronic payment systems in enhancing the country's compliance with anti-money laundering (AML) regulations. During the Electronic Payment Conference for Financial Stability in Iraq, held in Baghdad in September 2024, CBI Governor Ali Al-Alaq emphasized that the utilization of electronic payment systems and banking technologies has significantly improved Iraq's AML efforts.
Al-Alaq highlighted that the global focus on implementing AML compliance rules has been bolstered by the adoption of electronic payment systems. He explained that the safety of banking operations is paramount for community welfare, economic stability, and domestic and international banking relations. Al-Alaq stressed that when implementing any process within the framework of electronic payment systems, the question of compliance and governance arises, with a greater emphasis on measuring the level of compliance in each operation.
Digital Payments Offer Enhanced Compliance and Faster Transactions
The governor noted that electronic matters are easier to apply and more feasible, leading to much better compliance levels compared to traditional methods. Electronic payments offer faster and more accurate transactions, providing detailed insights into every transaction. With the use of personal cards, comprehensive and real-time analysis of transactions is possible, including the location and types of transactions, and whether they align with compliance standards and sources of funds.
New Regulations for Electronic Payment Services
To further enhance financial security in Iraq, the Iraqi Cabinet issued a new set of regulations for electronic payment services in April 2024. This landmark regulatory update, published in the Official Gazette, replaced the 2014 framework and introduced significant changes to bolster efficiency, security, and transparency in the financial sector. The new regulations define electronic payment services and mandate that entities seeking to offer them must obtain a license from the Central Bank of Iraq, with licenses valid for ten years and renewable upon approval. The Central Bank holds exclusive authority over the regulation, registration, and licensing of third-party-operated electronic payment systems and their compliance monitoring.
Digital Banking Regulations in Iraq
In addition to the new regulations for electronic payment services, the Central Bank of Iraq launched a regulatory framework for licensing digital banks in Iraq on March 28, 2024. Digital banking is revolutionizing the financial sector in Iraq, but it also requires navigating complex regulatory frameworks. Digital banks must comply with capital requirements, shareholder composition, and other licensing conditions and seek approval from the Central Bank of Iraq before appointing leaders.
SWOT Analysis: Electronic Payment Systems in Iraq
Below is a SWOT analysis of electronic payment systems in Iraq, highlighting the strengths, weaknesses, opportunities, and threats associated with their implementation.
Strengths
Enhanced compliance with anti-money laundering regulations
Faster and more accurate transactions
Increased financial security and transparency
Weaknesses
Potential for technical issues and system failures
Cybersecurity risks and data breaches
Resistance to change from traditional banking methods
Opportunities
Boosting economic growth and development
Encouraging financial inclusion and accessibility
Integration with global financial systems
Threats
Economic volatility and oil price fluctuations
Political instability and conflict
Regulatory changes and compliance challenges
Conclusion
The Central Bank of Iraq's recognition of electronic payment systems' role in enhancing AML compliance underscores the importance of these technologies in modernizing the country's financial sector. The new regulations for electronic payment services and the licensing of digital banks are expected to have a positive impact by safeguarding consumers and promoting financial system stability in Iraq.
