Iraq Economic News and Points To Ponder Saturday Afternoon 8-9-25
Iraq Economic News and Points To Ponder Saturday Afternoon 8-9-25
Ministry Of Planning: More Than 700 Trillion Dinars Is The Expected Revenue In The Development Plan.
Buratha News Agency 25-08-09 The Ministry of Planning announced, today, Saturday, that the total revenues expected to be achieved during the five-year development plan period 2024-2028 will amount to about (710) trillion dinars, as the official spokesman for the Ministry, Abdul Zahra Al-Hindawi, stated to the official agency, that “the largest proportion of these revenues will come from the oil sector, as it is expected that oil revenues will amount to about (631) trillion dinars, while non-oil revenues are estimated at about (79) trillion dinars.”
Al-Hindawi added, "The five-year plan estimated the investments required to achieve the targeted economic growth rate, which amounts to (4.24%) during its implementation period, at more than (241) trillion dinars," indicating that "the plan will see government sectors contribute about (157) trillion dinars of these investments, compared to (84) trillion dinars representing the contribution of the private sector."
He also explained that "the largest proportion of capital formation will be in the oil sector at 27.4%, followed by the housing ownership sector at 22.5%, then social development services at 20.8%. In contrast, the water and electricity sector will constitute 8.6%, while the share of the manufacturing sector will reach approximately 7.8% of the total planned capital formation."
https://burathanews.com/arabic/economic/463843
Central Bank Governor: We Are Working To Stabilize Prices
August 9, 2025 Central Bank Governor Ali Mohsen Al-Alaq: We are working to stabilize prices and eliminate inflation.
Baghdad - Hakim Al-Shammari Amid the profound economic transformations Iraq is undergoing, the Central Bank of Iraq is leading the way with major reform initiatives that touch the core of the financial and monetary system. From electronic payments to regulating monetary policy, expanding financial inclusion, and setting new standards for banking governance—all issues are now under the microscope of public opinion and those interested in economic affairs.
As the government begins taking serious steps to reduce reliance on paper money and promote a culture of digital payments, attention is turning to the institution leading this change: the Central Bank of Iraq.
In this extensive interview, the Governor of the Central Bank of Iraq, Ali Mohsen Al-Alaq, opens his office and his vision to discuss the challenges facing the financial system, digitization plans, the fight against monetary corruption, and Iraq's position on the regional and international financial map.
What has changed? Where do the banks stand? How is the fight against speculation and fraud being fought? And what is the future of the Iraqi dinar? We are asking many questions today, awaiting answers as profound as the anticipated transformation.
□ What are the Central Bank of Iraq's priorities in the next phase to maintain the stability of the Iraqi dinar?
The primary objective of central banks is to maintain the stability of the general price level by targeting inflation. This is what the Central Bank of Iraq seeks to achieve through the use of available monetary policy tools, including liquidity sterilization tools to control liquidity levels in the markets.
The most important tool is the process of strengthening banks’ foreign currency balances with their senders abroad to finance foreign trade needs, in addition to meeting other customer requests in various foreign currencies.
This bank has sought to make a qualitative leap in terms of technological construction, governance, and control of transfer operations, in addition to establishing a cash sales system to control sales operations.
It also provides electronic payment tools, including credit and debit cards, through banks and electronic payment companies in Iraq, to facilitate payment transactions inside and outside Iraq.
The Central Bank issued other tools that contribute to controlling liquidity to maintain the stability of inflation rates, namely the securities it issues with maturities of (14, 182) days and interest rates of (4 percent and 5.5 percent) respectively.
The Central Bank of Iraq is also focusing on improving the banking system and encouraging citizens to use cards and banking services instead of cash, thus easing pressure on the informal market. It is also working to strengthen money transfer systems and monitor financial transactions to prevent money laundering and currency smuggling.
In this context, the Central Bank of Iraq is placing increasing importance on developing the banking sector's infrastructure and encouraging citizens and institutions to transact through formal banking channels with the aim of reducing the size of the informal economy and promoting financial inclusion.
Furthermore, coordination between the Central Bank and the government is underway to ensure that inflationary pressures are not created that would negatively impact monetary stability.
Finally, in the coming period, the Central Bank is moving towards maintaining the stability of the local currency through a combination of technical measures, effective oversight, and structural reforms in the financial sector.
□ How does the central bank assess the impact of current monetary policies on inflation and unemployment?
The Central Bank of Iraq seeks to achieve economic stability through monetary policy tools, such as interest rate control, liquidity management, and exchange rate controls. To assess the effectiveness of these policies, the Bank conducts regular analysis of their impact on inflation and unemployment rates.
Inflation data indicates that it declined to 2.6 percent in 2024, compared to 4.4 percent in 2023.
The unemployment rate decreased by 3 percent, reaching 14 percent in 2024, compared to 16.5 percent in 2022. This is due to the Central Bank of Iraq's adoption of monetary policies that led to trade financing at the official exchange rate to control imported inflation and raised the policy interest rate to control liquidity levels, which directly impacts inflation.
□ What measures is the Central Bank taking to promote financial inclusion in Iraq?
The Central Bank of Iraq has established a new administrative structure in all operating banks under the name of the “Financial Inclusion Department” pursuant to our circular No. 2025, which includes the operating regulations for the Financial Inclusion Department in banks.
The Central Bank is in the process of establishing an administrative structure under the name of Financial Inclusion in all non-banking financial institutions and preparing operating regulations for these structures.
The first national strategy for financial inclusion in Iraq (2025-2029) was prepared in cooperation with a number of international organizations. The strategy was launched on May 25, 2025. Work will be done to achieve the objectives of this strategy by forming diverse working groups to achieve the expected results.
The Central Bank of Iraq organizes periodic events and awareness workshops, such as the Arab Week for Financial Inclusion, which includes financial awareness campaigns and workshops in coordination with all banking and non-banking financial institutions.
It also sponsors and participates in international exhibitions, as well as in specialized exhibitions in the financial sector and digital financial transformation. It also cooperates with educational institutions to raise the level of financial inclusion.
Targeting financially deprived, rural, and remote areas by establishing teams to measure the extent of financial services access to these areas.
□ How would you describe the current relationship between the Central Bank of Iraq and the US Treasury?
The relationship between the Central Bank of Iraq and the US Treasury Department is characterized by ongoing cooperation and coordination to ensure Iraq's compliance with international standards for combating money laundering and terrorist financing.
The bank recently held several meetings with the US Treasury Department and the Federal Reserve to discuss financial reforms and enhancing transparency in the banking system. US authorities praised Iraq's steps in this direction, particularly with regard to developing financial transfer mechanisms and strengthening oversight of dollar movements.
□ What is Iraq's position on the recent restrictions imposed on dollar transfers? Are there steps being taken to reduce reliance on the dollar?
There are no restrictions on dollar transfers, as evidenced by the steady increase in bank balances in US dollars.
For the first time, in other currencies such as the Euro, Jordanian Dinar, Indian Rupee, Chinese Yuan, Saudi Riyal, and others.
In addition to the expanding network of foreign correspondents for banks operating in Iraq, this has contributed to increasing the options and channels available to all transfer requesters.
*- How do you respond to criticisms directed at the currency auction mechanism as a means of money laundering or currency smuggling?
The Central Bank has faced these criticisms for years, without any evidence. Therefore, it has taken serious steps to regulate foreign exchange transactions, including establishing an electronic platform and auditing transfers by international companies specializing in this field. Furthermore, the bank recently ended the foreign currency buying and selling window, transferring responsibility for transfers directly to banks and their senders.
There is a great demand from Iraqi banks and branches of foreign banks to participate in the strengthening operations, as the number of banks has increased to 22 banks, and the number of participating companies has reached 5923 companies by the end of the first quarter of this year, 2025, with a number of transfer operations amounting to 46,762 transfers.
*- What are the recent reforms to the dollar sales system to ensure transparency and prevent exploitation?
The electronic platform for verifying transfers was created by international companies specialized in this field.
*- Are you thinking of canceling the currency auction or replacing it with a more modern mechanism and linking it to the banking system?
The foreign exchange buying and selling window was discontinued, and responsibility for remittances was transferred directly to banks and their senders. This was completed in early 2024.
*- What is your assessment of the resilience of the Iraqi banking system in light of the recurring economic and political crises?
The Iraqi banking system has faced recurring challenges stemming from the economic and political crises that have plagued the country in recent years. These challenges include its reliance on a rentier economy, as the banking system remains heavily dependent on state funding, making it vulnerable to fluctuations in oil prices.
Furthermore, private banks are weak, lacking the capacity to play an effective developmental role in the economy.
Furthermore, there is a lack of public trust, reflected in low levels of financial inclusion. Furthermore, political and geopolitical unrest has impacted remittances and international transactions.
Despite all these challenges, there are strengths in favor of the banking system, represented by the regulatory reforms witnessed in recent years, represented by the development of banking oversight systems and the gradual implementation of international compliance standards for combating money laundering and terrorist financing. In addition, government support, as state-owned banks dominate the banking sector, provides it with relative stability during times of crisis. In addition, the digital transformation, the adoption of electronic payment systems, and the improvement of digital infrastructure have contributed to reducing the use of cash and increasing transparency.
Based on the above, the resilience of the Iraqi banking system can be classified as moderate. The sector has some resilience against crises, but it faces structural challenges that require deep and sustained reforms. Reforming the banking sector is a cornerstone of Iraq's economic development path.
This requires an integrated strategic vision and close cooperation between the Central Bank and other financial institutions, as well as the public and private sectors.
*- How can the central bank contribute to stimulating the real economy, not just the monetary aspect?
The Central Bank of Iraq has contributed significantly to promoting economic development, creating job opportunities, and achieving prosperity in Iraq by providing basic financial support to small, medium, and large enterprises in various sectors (such as agriculture, industry, housing, trade, healthcare, education, tourism, and transportation) through its initiatives that amounted to more than (13) trillion dinars with the aim of financing various economic activities and supporting all segments of society.
*- What is the bank's plan regarding the digital transformation of the banking sector over the next five years?
The Central Bank of Iraq is working to implement its strategic plans for digital transformation in the banking sector, which aim to develop the digital infrastructure and enhance the efficiency and security of financial services.
The plan includes several projects and initiatives, most notably the Instant Payment Project to enhance the efficiency of financial transfers effectively and instantly, and the establishment of a regulatory sandbox at the bank to encourage secure experimentation with financial technologies and meet the requirements for launching services safely and quickly.
The plan also includes the National Payment Network Project to enhance the national digital payments infrastructure, and the National Unified Electronic Payment Gateway to enhance the digital transformation of government collection processes.
The plan also includes working with relevant entities and in cooperation with relevant international organizations and bodies to study the preparation of a draft law regulating virtual assets, digital currencies, and cryptocurrencies within a legislative oversight framework.
*- Is there any intention to issue an Iraqi digital currency or join international initiatives in this field?
The Central Bank of Iraq is monitoring international and regional developments related to central bank digital currencies (CBDCs) and is currently preparing a specialized study to assess various dimensions related to them, including the impact on monetary policy, the efficiency of electronic payment systems, financial inclusion, and technical and legislative infrastructure requirements. It also prioritizes monitoring global experiences and leveraging best practices, while maintaining a gradual and systematic approach. LINK
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