Parallel or black market forex still exists in Iraq...where the US dollar is traded slightly higher rate than the official one.
The US and Iraq are working to close this gap by putting anti-smuggling controls in place and digitizing transactions.
You cannot exchange foreign currency without your passport [at an international airport]. The amount determines reporting requirements.
The limit is $10,000 per transaction per day. Therefore to exchange $100,000 you would need to exchange currency for approximately 10 days. The same hold true when activating transaction over $10,000 at your local bank.
Many time small foreign currency exchange services will report the transaction [to the IRS] even if it's under $10,000...
AFTER 19 DAYS, A FINANCIAL SHIFT DIRECTLY AFFECTS IRAQIS’ POCKETS.
Nineteen days separate Iraq from implementing a ban on cash payments in government institutions and adopting all government payments electronically. This is a “strategic” step to improve governance, reduce corruption, promote economic growth, and promote a cultural shift toward transparency and modernity, according to the Prime Minister’s advisor for financial affairs, Mazhar Mohammed Salih.
However, this shift comes at a time when economic experts believe that awareness of the importance of electronic payments remains limited, particularly in rural areas and among the elderly. There is a significant gap between urban and rural areas, where infrastructure and awareness are weak, and where there are few outlets for effective coverage.
The Iraqi government has decided to ban cash payments at government institutions starting next July, and to adopt all government payments electronically. To this end, it has launched awareness campaigns to encourage the adoption of electronic payment systems and move away from the traditional cash-based culture.
Limited development
Economic expert Ahmed Abdel Rabbo asserts that “there has been a significant improvement in awareness, but it remains limited. Electronic payment card ownership has reached 45% of adults (approximately 20 million cards), with bank accounts growing. There is also a significant gap between urban areas (such as Baghdad) and rural areas, where infrastructure and awareness are weak.”
Speaking to Shafaq News Agency, Abdul Rabbo pointed out the “need to encourage citizens to prefer electronic payments to avoid the risk of theft or damage to cash, especially with 95 trillion Iraqi dinars hoarded outside banks.” In addition, Abdel Rabbo stresses the importance of “expanding the number of retail outlets, as they do not exceed 50,000 devices, while the country needs 800,000 devices for effective coverage.”
Based on the above, Abdel Rabbo calls on the Central Bank to launch a campaign to enable vulnerable groups (such as rural residents) to access banking services, increase the percentage of account holders, and develop infrastructure such as internet networks and POS devices .
The importance of electronic payment
Economist Munir al-Abidi agrees with Ahmed Abd Rabbuh, stating that “Iraqis’ awareness of the importance of electronic payments is still developing, gradually increasing with the introduction of smart card payments and the proliferation of banking applications, particularly among youth and urban residents.”
However, Al-Abidi added to Shafaq News Agency, “Awareness of the importance of electronic payments remains limited in rural areas and among the elderly, due to weak trust in the banking system, a lack of financial literacy, and fear of electronic fraud.”
Regarding the most important factors influencing the adoption of electronic payment, Al-Abidi summarizes them as “the availability of infrastructure (internet, points of sale), trust in banks and service providers, financial awareness and digital education, government incentives (such as subsidies, discounts, and partial obligation), and the acceptance of these methods by merchants and small businesses.”
Great benefits
Al-Abidi asserts that “expanding the use of electronic payment systems brings significant benefits to both the state and its citizens. For the state, it contributes to reducing cash transactions, which reduces tax evasion and increases financial transparency. It also enhances the efficiency of government spending management and facilitates oversight of financial flows.”
For citizens, “electronic payment provides ease and security in conducting transactions, grants them faster access to salaries and services, reduces the risk of theft and carrying cash, and enables them to access the financial system and benefit from loan, savings, and insurance services,” according to Al-Abidi.
For his part, the Prime Minister’s Advisor for Financial Affairs, Mazhar Mohammed Saleh, said, “The steps the country is taking to adopt electronic payments are consistent with the e-governance mandated by the government program in terms of speed, accuracy, quality, and timing.”
Saleh explained to Shafaq News Agency, “The importance of electronic payment in state institutions is specifically summarized in its economic, administrative, and cultural aspects. It is a strategic tool for improving governance, reducing corruption, and promoting economic growth and cultural transformation towards transparency and modernity.”
In this regard, “it can enhance the strength of the unified treasury account system in terms of the speed of financial collection and the unity of flows in cash budget accounts with high-level governance without fragmentation or slowdown,” according to Saleh.
Electronic collection
He explained, “Government e-collection strengthens collection activities by controlling the flow of cash resources (such as fees, taxes, and wages), which reduces waste and increases state resources, thus better narrowing the gap between revenues and public expenditures, especially for non-oil revenues.”
Another benefit of electronic payments, Saleh continued, is that “electronic payments reduce cash manipulation and informal collection, and make money movements highly traceable and auditable, as all electronic transfer transactions are subject to a central digital system, allowing for easy auditing and review.”
He added, “At the same time, electronic payment helps citizens quickly settle payment obligations, particularly those related to services (such as paying electricity bills, passports, various fees, and taxes) easily over the phone or the internet, without having to stand in long, time-consuming queues.”
He adds, “It’s no secret that the culture of electronic payments helps integrate citizens into the digital environment and reduces fear or skepticism about digital transactions. This culture is closer to implementing the ‘financial inclusion’ strategy than providing banking services to the most vulnerable segments of society and gradually integrating them into the country’s banking system. This encourages savings, financial planning, and spending control.”
Saleh concluded his remarks by saying, “Electronic payment is not just a technical tool; it is part of the vision to modernize the Iraqi state administratively, economically, and culturally. Its widespread adoption is a crucial step toward a transparent digital economy, improving government performance and bringing services closer to citizens in the age of the digital economy.”
(Mnt Goat: This is the final warning for the citizens of Iraq to open a bank account and get their debit card. They are trying to sell the idea now again to those that do not trust the banks. In the western society we have had these automatic bank deposit ability and debit cards for almost four decades.)
Mountain Goat, appreciate your analysis. Just one thing has left me and other quite confused it seems “To gauge success, they must get through multiple months of payroll”
So government salaries will delay an RV for months.
I’m struggling to understand this brand new scenario that was injected today.
Salutations.
Answer: Mnt Goat
Thanks everyone for your question on this topic of gauging for success of the electronic payroll mandatory rollout in Iraq starting in early July. There is no short answer to this question. Remember this is an ongoing RV saga and it may take to 2026 or even longer., but I doubt it. Who the hell knows for sure. But if you have been paying attention you can see that with stability and security and everything else, there is a very high probability this will not go past the summer. What scares me the most is Iran and a war with Iran.
So let me explain in more detail to clarify. First let me refer you to an article that just came out titled” “AFTER 19 DAYS, A FINANCIAL SHIFT DIRECTLY AFFECTS IRAQIS’ POCKETS.” You might want to first read it then follow up on my explanation below. The article is really informative but it is geared towards the average citizen and is more of a motivating article and “last call” to go get your bank account or else? Later the CBI will say we gave you 2 years to do it. Don’t blame us your pay is delayed.
By the way the comment about this being a “brand new scenario that was injected today” did not make any sense to me. The CBI has been trying many methods for years to get this money into the banks. I presented to you all these articles over the years. Did you read them and pay attention? I also have described to you the Dr Shabibi plan over and over again. I even have a separate link in my blog explaining the process. But comments like this only tell me you look at this as an obstacle (because you want the RV now) rather than good news and allowing the CBI, if successful, to move ahead to the next stage of the plan. I keep telling you there are NO SHORTCUTS to the currency reform process!!!!!!
This above article does not talk about the impact this will have on the RV process, Dr Shabibi’s plan of 2011. That’s the part I want to emphasize now but remember it all interconnected anyhow. So, if the CBI can get these hoards of cash into the banks this will drive the economy by providing money to loan out for various projects, new homes, cars, new startups, etc.. It will fund the economy. If you study macroeconomics you will find that you need a flow of capital for a healthy economy, which they don’t now have. Without a good economy they can’t prove that they can sustain a rate (around $4+) that is planned/projected/wanted for the new Forex rate. Next, this new rate on Forex also will be in a basket supporting other currencies in the basket, normally trading partners. So, sustainability is very important.
The less obvious impact on the RV is that the CBI can’t have all this cash suddenly coming out of the closets when they revalue in-country 1:1 and then do the currency change out to the newer lower denominations. This would cause massive inflation as there would be too much money in the monetary mass, too many millionaires. So, besides liquidity in the banks they are worried about post-RV inflation. Inflation right now in Iraq is the lowest in the middle east at only 1%. Remember I keep telling about this inflation monitoring process afterwards when they do go 1:1 but before they go to Forex. Did you forget?
This brings us to realize that getting these stashes of cash will happen in a couple ways:
1.For those that haven’t yet set up bank accounts (still about 55% of population) are usually the ones that don’t trust the bank the most, right? That is the CBI assumption. These are the ones that most likely also have the large stashes of cash outside the bank, right? But there will be others too who are just lazy and wait till the last minute. They have until July 1st. Still 90% of the people are on the govt payroll in one way or another either salary, pension, social security, etc. etc. So, when their gov’t pay can’t be paid to them because they did not yet get a bank account, what will happen? The CBI (not me) said they estimate they will use this stashed money to live off of in the meantime until their request for an account goes through. How long will it take to deplete their at-home stashes? For these types of people I am told there will not be any rush to get the accounts done, since they want to take time for them to use up their money at home first to pay their bills. This may take a couple of payroll cycles or more. I am not saying it will, only they plan for the worst. It all depends how quickly the money flows back into the banks. I am sure the CBI has some level of percentage that is acceptable.
2.A second ploy the CBI will use, as DR Shabibi used, is to offer incentives like offering discounted gold, larger returns on saving accounts or special long-term bond purchases. Yes, anyway to get this cash into the banks. For all we know this may only take a week or maybe more than 2 months. Who knows….
😊 I hope this helped.
____________________________
We must stay vigilant in our prayers. God is on our side and has said he will bring peace to the middle east too. There are a lot of moving pieces and things could happen suddenly. Remember that the govt and the CBI are on our side and want this RV as much as we do. But it is an uphill battle for Iraq, one they are slowly overcoming.
Now, all my readers can take this news as encouraging or negative. I can’t help the way you THINK. But for me it is all good and moving ahead. Our main focus now should be on Iran and what happens with the U.S. Also watch July inside Iraq and if they can resolve this long-standing liquidity issue.
But let’s not lose sight of all the events happening in the U.S. and how important the are too. What do the modern prophets tell us is coming?
Telling you the TRUTH, you do want to know the TRUTH?
The Iraqi Securities Commission (ISC) has announced new efforts to enhance the attractiveness of the Iraq Stock Exchange (ISX), focusing on corporate governance and expanding the base of listed companies.
State-run Iraqi News Agency (INA) quotes ISC board member Wadhah al-Taha as saying that the launch of a corporate governance guide marks a key step toward strengthening the investment climate.
He noted that the Commission plans to introduce new companies through initial public offerings (IPOs) aimed at encouraging domestic investors to engage with profitable firms that offer regular dividends. This is expected to boost investor confidence and increase market activity.
Al-Taha added that these reforms send a message to international investors that Iraq’s capital market is moving toward greater transparency, sustainability, and effective risk management.
He also highlighted Iraq’s recent integration into an international platform that includes nine global markets, placing the ISX under international observation and accelerating the need for reform.
The Commission’s broader strategy includes:
Strengthening the corporate governance framework
Expanding training programs
Increasing the number of high-quality, profitable listed companies
Diversifying market offerings to reduce risk and enhance returns
Currently, 103 companies are listed on the ISX, but investor activity is concentrated on only 20-25 firms. The Commission aims to widen the range of active, reliable investment opportunities.
(Mnt Goat: So, this news goes hand in hand with the Pillars of Financial Reform. Remember them- Banking, Insurance and Stock Market. )
😊The final waring goes out to the general public of Iraq in the recent article titled “AFTER 19 DAYS, A FINANCIAL SHIFT DIRECTLY AFFECTS IRAQIS’ POCKETS.”
Just nineteen days separate Iraq from implementing a ban on cash payments in government institutions and adopting all government payments electronically.
This is a “strategic” step to improve governance, reduce corruption, promote economic growth, and promote a cultural shift toward transparency and modernity, according to the Prime Minister’s advisor for financial affairs, Mazhar Mohammed Salih.
I find it a very informative article as it goes through the importance and the benefits of having automatic payments and the use of a debit card. I want to warn all my readers again that this is not central bank crypto like currency.
This is simply electronic deposit of all govt payments to individuals such as salaries and pensions, etc. But to receive the payment from the govt you must have an account to drop the digital money into.
Remember we all read about this months ago and so now it is here in early July. All we can do it sit back and watch for the fallout, if any. I certainly hope its all positive as this should bring us one step closer to collecting of all the extra cash into the banks and thus the Project to Delete the Zeros can occur.