Iraq Economic News and Points To Ponder Tuesday Afternoon 7-22-25

It Didn't Bring Anything New," An Economist Comments On The IMF's Report On Inflation Stability In Iraq.
 
July 21, 2025  Baghdad/Iraq Observer  Economic and financial expert and consultant Dr. Ahmed Al-Husseini commented on the latest International Monetary Fund report, stressing that it offered nothing new. Despite Iraq's control over inflation levels through its monetary policy, inflation has had a different impact on the lives and livelihoods of ordinary citizens, who suffer from high prices for both basic commodities and services. 

Al-Husseini told the Iraq Observer, "The IMF report did not provide anything new. For several years , Iraq has been controlling inflation, with it never exceeding 4% even in the worst of circumstances.

This is due to the monetary policy Iraq adopted, which was a balanced policy that combined control of  the banking system on the one hand and control of the required reserve ratio on the other."
 
Regarding the US sanctions, Al-Husseini explained that "these sanctions, imposed on a group of Iraqi banks, which, from the US Treasury's perspective,  had some violations in their monetary policies,  contributed, in one way or another, to reducing the level of inflation by controlling  credit levels,  money laundering, and other banking operations  carried out by these banks." 

He added, "Iraq has also controlled inflation through its control of the money supply, in addition to the  regulations and laws in force at banks. The Central Bank's actions, in turn, were calculated by its entry into the open market, as it knows  when to buy or sell bonds, as well as the discount rates on banknotes, in order to  control and manage inflation in the country."
 
“Although inflation levels are stable, the reality of inflation is clearly reflected on the average citizen through the impact on his real wage and on the consumption level for those with limited incomes.
 
Nominal wages are still not in line with inflation rates.
 
This is clear, as a large segment of citizens are complaining about the high prices and cost of living,
especially for basic commodities, not luxury items such as  food, medicine,  building materials and  clothing.
 
Even at the level of services such as   transportation,  health, education and other sectors, 
there is a noticeable rise in the level of prices,” he continued.
 
The economic and financial expert and consultant expressed his hope that "Iraq will adopt the new monetary policies currently in place in many countries around the world, which several countries, such as the Gulf states and Turkey, have begun implementing, based on  financing small projects and  clean energy projects."
 
The IMF promised Iraq is a country that has been successful in maintaining its internal stability despite regional tensions. It noted that Iraq's inflation rate has remained low, emphasizing the  need to implement fundamental reforms to  increase non-oil revenues and  control the public wage bill. It also called for a review of current and investment spending plans for 2025.      
https://observeriraq.net/لم-يأتِ-بجديد-معني-بألشأن-الاقتصادي-يع/  

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Digital banks in Iraq: the birth of a new financial era 
 
Economic 07/21/2025   Dr. Nabil Rahim Al-Abbadi    In conjunction with the Central Bank of Iraq's efforts to  enhance financial inclusion and  modernize the banking system,   a strategic initiative was launched.
 
This initiative includes  developing an instant payments project and  issuing local cards, in addition to  issuing regulations for licensing digital banks in Iraq.
 
This step comes as part of a comprehensive plan aimed at integrating modern technological concepts into the financial sector, taking into account the  technical requirements of the information infrastructure and the  cybersecurity risks that accompany this transformation.
 
The issued report highlights the mechanisms for establishing digital banks in Iraq and explains how to implement this initiative  in accordance with the regulations of the Central Bank of Iraq, in integration with local payment systems and global fintech standards, while adhering to environmental and social governance practices that have become  essential in the world of modern finance.
 
The proposed digital bank model focuses on providing financial services electronically,  without the need for traditional branches.
 
This includes payment services via apps, digital wallets,  transfers, loans, and more, targeting segments of society that are underserved by banking services, including   individuals,  small and medium-sized enterprises, and  rural communities.
 
In terms of objectives,The initiative seeks to  expand financial inclusion, reduce reliance on cash, which accounts for more than 90 percent of transactions, and   enhance the resilience of the local economy by supporting small and emerging businesses.
 
It also aims to strengthen adherence to security standards and combat financial crime.
 
The Central Bank's strategic plan for the period 2014-2026 also focuses on  modernizing the financial sector, expanding the bank account base, which does not exceed 30 percent of the population, and developing electronic payment systems.
 
This will contribute to achieving financial stability and attracting foreign investment  by aligning regulations with international standards.
 
Partnerships with international institutions such as the World Bank, the  United Nations Development Programme, and the International Finance Corporation  are pivotal to the success of this vision.

At the same time, regulations adopted in 2024 require  strict adherence to cybersecurity and data protection standards, along with building a robust technical infrastructure and  implementing effective anti-money laundering systems.

Challenges facing the sector include weak trust in digital transactions, regulatory complexity,  financial exclusion affecting more than half of the population, and the risks of cyberattacks due to weak digital infrastructure.
 
Despite these challenges, there are significant opportunities for growth. The Iraqi market is home to more than 45 million people, and there is widespread smartphone and internet penetration.

Furthermore, the government is keen to support technology projects in cooperation with global financial institutions, which paves the way for the growth of small and medium-sized enterprises and the  transition to a modern financial culture.
 
Digital payments market analysis reveals advanced demographic indicators, with the number of internet users reaching 35 million,  mobile phones reaching 47 million, and the number of digital payment users expected to reach 25 million by 2027, although the adoption rate of these methods remains low compared to the region.
 
The digital bank's initial capital has been set at 100 billion Iraqi dinars, to be distributed over five years.
 
Foreign investment may not exceed 49 percent, subject to the approval of the Central Bank.
 
Furthermore, foreign o ownership in digital banking projects may not exceed 56 percent per investor, with the possibility of a slight increase if approved by regulatory authorities.
 
This is intended to ensure financial stability and strengthen the operational structure.
 
An important aspect is environmental, social, and governance (ESG) practices,
which include adherence to the sustainable finance roadmap, promoting social inclusion, implementing transparent governance structures, and effective risk management.
 
Establishing a digital bank in Iraq is not only a response to global trends,
but also a strategic opportunity to support the national economy and provide modern banking services to a broad segment of citizens.
 
This requires strict adherence to legislation, a flexible operational approach, and the political and economic will to keep pace with the global digital transformation.    https://alsabaah.iq/117734-.html    

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