FRANK26: "THE BANKING REFORM HAS BEEN SUCCESSFUL FOR THE ECONOMIC REFORM... THIS IS THE REPORT"...........F26
Al-Nusairi identifies the challenges facing Iraqi private banks and opportunities for banking reform
9/17/2024
Baghdad
Iraqi private banks suffer from many challenges and work obstacles, and face wide crises and risks due to economic instability due to the challenges of instability in the financial and monetary system, shortcomings in the investment environment, and deficits in the balance of payments and trade balance.
Iraq has eight government banks, and the structure of the Iraqi private banking sector consists of 32 Islamic banks and 28 commercial banks.
Advisor to the Iraqi Private Banks Association, Samir Al-Nusairi, told Al-Eqtisad News, "The number of private bank branches is about 500 branches inside and outside Iraq, and they have expanded and developed technically according to modern electronic banking systems."
Al-Nusairi pointed out that the private banking sector in Iraq faces operational challenges in addition to the above, most notably the US sanctions and restrictions imposed on 51% of the total private banking sector in Iraq and the prevention of 28 of them from using the US dollar in banking transactions, which affected their local and international activities and harmed the national economy.
He explained that the most important obstacles facing banks currently are technical, financial and administrative, especially in the procedures, instructions and decisions of digital transformation, which requires providing full support for this transformation process and using electronic payment tools in government, mixed and private institutions, and setting a time frame for the complete transition from the use of paper money to electronic payment.
He added that the private banking sector suffers from the differentiation between it and the government banking sector, as government banks account for 87% of total deposits and 78% of total assets, and it also suffers from weak activity and low liquidity, deposits, revenues and profitability in most banks, especially the 32 banks that have been subject to sanctions and restrictions, in addition to the decline in the shares of most banks in the trading market in the Iraq Stock Exchange.
Al-Nusairi added that private banks also suffer from double taxation, as the Tax Department in the Kurdistan Region of Iraq, for example, imposes on the branches of private banks in the region (their number exceeds 70 branches) to pay the annual tax, while these banks, according to the current Federal Tax Authority Law, pay the same tax centrally in Baghdad.
Al-Nusairi stressed the necessity for the Iraqi Council of Ministers to resolve the issue in the region and put an end to double taxation, and for tax collection to be centralized according to the law and for the audited final accounts submitted to the General Tax Authority to be adopted as a basis for tax accounting.
The advisor to the Iraqi Private Banks Association called for "implementing the seven decisions issued on 4/4/2024 in implementation of the directives of Prime Minister Mohammed Shia al-Sudani, which are related to supporting our private banks, which confirm the government's vision in its governmental program for financial and banking reform, as well as activating and accelerating the implementation of the agreements that were reached in the rounds of negotiations between the Central Bank and the US Treasury in Washington and Baghdad to lift US restrictions on the use of the US dollar."
He explained that "the Prime Minister's decisions supporting private banks outlined the executive procedures for comprehensive reform of the banking sector, which constitutes the basis and real beginning of the accomplished economic reform. These decisions included the following:
1- Preventing monopoly in banking services.
2- Activating the Central Bank’s financing initiatives.
3- Increasing cooperation between private banks and the Central Bank in discussing decision-making related to supporting and developing banking work.
4- Determining the contribution of foreign capital to Iraqi banks.
5- Participation of government institutions and financing funds with private banks and expansion by opening branches in countries.
Other.
6- Support from the government and the Central Bank to private banks in foreign institutions and banks.
7- Increasing reliance on private banks by the Iraqi state and activating the deposit of government deposits and government bank deposits with private banks.
Al-Nusairi stressed that implementing the decisions, which are practical applications to encourage private banks to develop their internal and external banking operations, will contribute to economic reform, pointing out “the importance of the Central Bank accelerating the procedures to rehabilitate and restructure these banks, as well as the necessity for the international auditing company to complete its agreed-upon work in order to lift the imposed restrictions and limitations.”
He concluded his speech by saying: "This file is certainly the focus of the government's interests, the Central Bank, the Iraqi Private Banks Association, and the banking sector in general."
Article: "6 scenarios that the Iraqi Central Bank will work on, narrated by Al-Issawi "
Quote: "The economic expert stated that the Central Bank of Iraq is negotiating with the US Federal Reserve regarding ending the work of the electronic platform for foreign transfers and replacing it with direct banking relations between Iraqi banks.
tishwash
Article: "Al-Sudani: Iraq today is on the right path"
Quotes: "We have started establishing and implementing the development road project, which will transform Iraq into an open country.; "Many capitals want to invest in Iraq...Iraq is witnessing recovery and stability and everyone needs his return"; We have made real reforms in the tax and banking system. There is no spot on Iraqi territory outside the control of our security forces, and we have directed the preparation of a comprehensive plan to secure the path of development."; "Iraq today is on the right track".
Financial Inclusion in Iraq: Current Landscape and Future Aims
Financial inclusion in Iraq has been a significant focus in recent years, with efforts aimed at enhancing access to financial services for both businesses and individuals, particularly those in vulnerable populations. As of September 17, 2024, the situation in Iraq presents a picture of progress and potential, yet challenges remain.
Current State of Financial Inclusion in Iraq
Low Uptake of Financial Services
Historically, Iraq has faced challenges with financial inclusion, with less than 20% of adults holding bank accounts with formal financial institutions as of 2021, according to the Global Findex Database. This scenario is further complicated by the fact that less than 5% of micro, small, and medium-sized enterprises (MSMEs) use bank lending, limiting their growth prospects and the country's overall economic development.
Initiatives to Enhance Financial Inclusion
To address this gap, initiatives like the SheCan program by the World Food Programme (WFP) have been launched. SheCan is designed to bridge the financial inclusion gap for vulnerable populations, specifically targeting women and smallholder farmers.
By collaborating with local financial service providers, SheCan designs and implements gender-responsive lending products tailored to the unique needs of these groups.
Recent Surge in Financial Inclusion
Notably, Iraq has witnessed a significant surge in financial inclusion, with a reported increase of 48.5% in the current year, as announced by the Iraqi Private Banks League (IPBL). The IPBL attributes this change to government-backed initiatives and aims to achieve a 60% financial inclusion rate by the next year.
Future Aims and Challenges
Aiming for 60% Financial Inclusion
The IPBL's target of achieving a 60% financial inclusion rate by the next year is ambitious but reflects the commitment of the Iraqi government and private sector to improve access to financial services. Efforts are being made to integrate financial literacy into school curricula and provide continuous training to develop the necessary infrastructure.
Economic Challenges and Opportunities
Despite these efforts, Iraq faces significant economic challenges, including dependence on oil revenues and vulnerabilities to oil price volatility. The International Monetary Fund (IMF) has highlighted the need for fiscal adjustments and private sector development, including labor market reforms, financial sector modernization, and restructuring of state-owned banks.
Promotion of SMEs and Access to Finance
Recognizing the role of SMEs in job creation and economic growth, projects like the Promotion of Small and Medium Sized Enterprises (SMEs) in Iraq, supported by the International Labour Organization (ILO), aim to provide sustainable access to financial services for SMEs and startups, with a focus on youth and women.
G20 Financial Inclusion Indicators
The G20 Financial Inclusion Indicators Database offers additional insights into Iraq's financial landscape but does not provide specific figures as of the latest update.
Conclusion
Financial inclusion in Iraq is on the rise, driven by government and private sector initiatives, as well as support from international organizations. The country's efforts to improve access to financial services for individuals and MSMEs, particularly those in vulnerable populations, are crucial for economic growth and social well-being. However, significant challenges remain, necessitating further reforms and investment in infrastructure and education.
Electronic payments...you can get this feeling it's showtime because they're really doing the development of the reality of financial inclusion. They're spreading that financial culture around the country...It's coming, the growth stage.
Militia Man
The development Road Project is opening up Iraq to the region and into the international world. The private sector is going to be the main driving force...They're going to have to expose an exchange rate at some point in time, sooner than later. I'm going to go with sooner.
They're talking about Iraq as going global and to the international financial system.
With that has responsibility and that responsibility will be defended by the central bank. That responsibility is to have a stable exchange rate and to provide commerce throughout the country in and out and across borders, with efficiency and transparency. That's what they're going to have and that's what they're doing. There's looking to be no stopping it. It's brilliant.
The news out of late is completely off the charts and it points to I believe international. Internationalism is where Iraq is headed. I don't believe for a minute they're going to stop until they complete it...
FRANK26: "EXCEPT FOR GURU FRANK26... SMILE".............F26
Iraqi government moves to impose taxes on social media sites
9/16/2024
Financial expert Nabil Al-Marsoumi revealed on Monday that the Iraqi government is planning to impose taxes on social media sites in Iraq, among the people covered by these taxes.
Al-Marsoumi told Shafaq News Agency, "The Iraqi government is studying a proposal to impose taxes on content creators on social media sites in the country, not users of those sites. This process came in order to enhance non-oil revenues, especially in light of the decline in oil prices and the deterioration in oil revenues. These taxes will provide good financial revenues, and for this reason the percentage will be 15% of the profits of content creators, especially since some of their profits are estimated in the millions on a daily basis."
He added, "This decision does not require a vote by the House of Representatives, as this is a decision within the authority of the Council of Ministers to expand the tax base, and does not require a law, but it is still under study, and may come into effect at the beginning of next year, as it requires months of work and study."
