The Governor of the Central Bank of Iraq, on Monday, indicated the plan to reform the banking sector in Iraq, and while he touched on the issue of sanctions on Iraqi banks, he stressed that these measures did not threaten the Iraqi economy.
The Governor of the Central Bank, Ali Al-Alaq, said in a televised interview followed by “Economy News”, that “the current Iraqi government is very focused very much on the dimension and economic renaissance, and the expansion of infrastructure and services,” noting that “this requires the existence of an active and effective financial sector that can keep pace, activate, organize and finance; Therefore, this file goes hand in hand in hand with the government’s plan within the framework of economic reform.”
He added, “Iraq has a very large financial relationship with the United States of America, considering that the oil resources that form the basis for the Iraqi state’s budget come from the export of oil through the dollar, and this is what is agreed upon globally,” pointing out that “the first stop of Iraqi funds is in the Federal Reserve, and then the Central Bank deals with these funds by investing them in multiple fields inside and outside the United States in central banks of other countries.”
The Governor of the Central Bank continued, “There is a diversity in the nature of these reserves such as the geographical and qualitative diversity in these investments, which are in the form of bonds, gold, goods and others.”
On the issue of financial reform in Iraq, Al-Alaq explained that “Iraq has a multi-pronged program in this framework, as the first aspect is harmony, adaptation, the adoption of international standards in financial transactions and the application of compliance rules and laws related to combating money laundering and terrorist financing,” stressing “the existence of great Doll interest and focus regarding the freeess of transactions from any excesses or irregularities and issues involving suspicions.”
He adds: “Sinceving that the financial relationship with the United States of America is wide and large; it is necessary to protect the Iraqi financial system as well as the system in America and prevent the entry of any money laundering or terrorist financing operations,” noting that “there is coordination and common understanding that has been ongoing, over the past years in order to achieve this goal, which includes the existence of wide plans and programs based on international consultations and contracting with the largest offices specialized in this field, with which the Central Bank is organizing these matters in order to achieve the great goal, which gives positive messages to financial institutions all the world.”
As for the second matter, he showed, “This matter revolves around the reform of the banking sector itself, which revolves around many details in the presence of plans being worked on, starting with government banks such as Al-Rasheed, Rafidain, Industrial and Agricultural, which constitute 80% of the Iraqi banking sector,” but saying: “If we want to think about the reform process, we must start from the most part, as it was agreed in direct coordination with the Prime Minister, the government and the Central Bank on the reform of these banks, through a large plan now being contracting with one of the major international companies, which includes restructuring.”
He continued, “There is a great focus on targeting structuring to upgrade these banks through the introduction of strategic partners from outside Iraq, who have accumulated experience in this field,” stressing that “there are clear wishes from some internationally accredited banks, in this field, and we are still considering the study of the company in charge of this matter in order to attract investors from inside Iraq as it will be like public shareholding companies that absorb capital from inside the country, in addition to the need for a strategic partner to modernize the departments of government banks in a way that lives up to the advanced level.”
He pointed out that “government banks have been long delayed because of the circumstances that the country has gone through, and it is necessary to keep pace with the process of major changes,” explaining that “the detailed study of this project will be submitted by the eighth month, and then there will be clarity of the road map and the next steps so that appropriate measures can be taken in this regard.”
“This is one of the things that was discussed during the meeting with the US Treasury, and is very welcomed by all parties not only in the United States, as it is the existing and continuous question by the parties to international institutions,” Al-Al-Alaq said.
Regarding the US sanctions on Iraqi banks, he said: “We have a close relationship with the US Federal Bank, and what happened is the appearance of a list of bank names, as the issue was not the imposition of sanctions on these banks, or their inclusion in the list of sanctions, but rather the denial of them from dealing in dollars only,” pointing out that “the Central Bank seriously stood on the merits of the issue, and how future measures, and this is part of the dialogue that took place, whether in the presence of the Prime Minister with the US Treasury, or even during the meetings held by the Central Bank with the US Federal Reserve.”
He pointed out that “violations in the banking sector exist, and they may occur, and this is the work of the Central Bank continuously, as we have a committee specialized in fines and penalties, and receives the reports of inspectors, and these fines are expected continuously according to the law on money laundering and combating terrorism.”
On the repercussions of this suspension on the Iraqi economy, Al-Alaq stated that “this suspension is certain to have negative effects, but will not threaten the Iraqi economy, especially as the external transfers and the exchange rate continue normally.”
As for the fictitious companies that sell the dollar, the Governor of the Central Bank said that “these phenomena exist in other countries as well, and by virtue of the technical developments and dealing through the sites, it is an opportunity to circumvent at the same time, and the Central Bank has a thorough follow-up of these matters and are reported in the judiciary, considering that the use of these means to follow others and warn of them.”
Al-Alaq touched on government debt, explaining: “The current government focused on the external debt, which is below, reaching $9 billion for multiple parties, which is the lowest during the past years due to continuous repayments, but with regard to the local debt, it reached about 70 trillion dinars.”
