Some “Iraq International News” Posted by Clare at KTFA 6-25-2025
KTFA:
Clare: IMF: Iraq has made progress in transitioning to a new system for financing foreign trade.
6/25/2025
The International Monetary Fund (IMF) mission considered that the Central Bank of Iraq has achieved "significant progress" by transitioning to a new system for financing foreign trade.
A statement issued by the bank quoted the mission as confirming that "the Central Bank of Iraq has made progress in absorbing excess liquidity by increasing the issuance of short-term debt instruments (central bank transfers and Islamic certificates of deposit), adjusting subscription limits for banks in central bank auctions, and improving liquidity forecasting tools and practices."
The statement added, "The mission commended the Central Bank of Iraq's efforts to successfully transition to the new trade finance system," noting that commercial banks now process trade finance transactions entirely through their relationships with correspondent banks.
According to the mission, "the Central Bank of Iraq has made significant progress by transitioning to a new system for financing foreign trade through correspondent banking channels, instead of relying on the daily dollar auction."
According to the statement, the mission indicated that "this development has contributed to enhancing banks' compliance with international transparency requirements, such as OFAC regulations and others, and improving their relationships with global correspondent banks."
The statement added that this step resulted in narrowing the gap between the official dollar exchange rate and its parallel exchange rate, indicating relative success in curbing illegal speculation and reducing currency leakage.
The statement continued, citing the IMF mission, that "the methodology for managing foreign exchange has become more effective than before, especially with the Central Bank of Iraq continuing to implement complementary measures such as requiring traders to submit genuine import invoices and simplifying procedures for obtaining hard currency for legitimate importers." LINK
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Clare: The IMF mission commends the Central Bank of Iraq.
June 25, 2025
The International Monetary Fund (IMF) mission, led by Jean-Guillaume Poulain, which met with the Central Bank of Iraq (CBI) from May 4 to 13, 2025, commended the CBI's work in several areas. It confirmed that the CBI has made progress in absorbing excess liquidity by increasing the issuance of short-term debt instruments (CBI drafts and Islamic certificates of deposit), adjusting subscription limits for banks in CBI auctions, and improving liquidity forecasting tools and practices.
The statement issued by the International Monetary Fund stated that the mission commended the efforts of the Central Bank of Iraq to successfully transition to the new trade finance system, indicating that commercial banks now process trade finance transactions entirely through their relationships with correspondent banks.
The Central Bank of Iraq has achieved significant progress by transitioning to the new system for financing foreign trade through correspondent banking channels, instead of relying on the daily dollar auction. This development has contributed to enhancing banks' compliance with international transparency requirements, such as OFAC regulations and others, and improving their relationships with global correspondent banks.
This step has resulted in narrowing the gap between the official dollar price and its parallel price, indicating relative success in curbing illegal speculation and reducing currency leakage. The foreign exchange management methodology has become more effective compared to the past, especially with the Central Bank of Iraq continuing to take complementary measures, such as requiring traders to submit genuine import invoices and simplifying procedures for obtaining hard currency for legitimate importers.
In parallel, the mission welcomed the progress made in the use of digital technology and the Iraqi authorities' intention to implement a comprehensive reform of the banking sector, calling for its completion to be accelerated without delay.
The Iraqi government, with technical support from the International Monetary Fund and other international bodies, has begun implementing initial steps to reform government banks, including auditing the quality of assets, estimating the size of non-performing loans, and developing a draft plan to restructure the two largest government banks (Rafidain and Rashid) financially and administratively.
The Iraqi financial sector has also witnessed an increasing trend towards digitization and the adoption of modern financial technology, whether in electronic payment services or the launch of banking platforms via the Internet and mobile phones.
The International Monetary Fund believes that these technical improvements, along with steps to enhance cybersecurity in banks, promote financial inclusion, expand private banking activity, and restructure government banks, will enhance the efficiency of financial services and increase foreign correspondents' confidence in the Iraqi banking sector.
The report also noted the expansion of private banks' activity in trade finance and small business financing, with expectations of further increases if obstacles are removed. Initiatives to enhance financial inclusion, modernize electronic payment systems, and reduce reliance on cash in the economy are also crucial to strengthening banking depth. The Central Bank of Iraq launched a national financial inclusion strategy during the first half of 2025.
The report also included important recommendations to enhance financial stability and facilitate the transfer of monetary policy effects to the real sector, including: reducing the phenomenon of dollarization, in which Iraq has made significant progress over the past two years; the importance of accelerating the completion of the comprehensive restructuring plan for banks to enhance their solvency; the importance of strengthening corporate governance for banks, developing digital infrastructure and cybersecurity for the financial sector; strengthening the role of private banks in financing economic development; and continuing to improve anti-money laundering and counter-terrorism financing procedures.
It is also important for the Central Bank of Iraq to continue increasing the issuance of short-term securities to ensure better management of excess liquidity.
Central Bank of Iraq
Media Office
https://cbi.iq/news/view/2916
Clare: Nearly $1 billion in international funding for Iraq to implement a massive transportation project.
6/25/2025
The World Bank announced on Wednesday that it had approved $930 million in financing to improve railway performance in Iraq, boost domestic trade, create jobs, and support economic diversification. The bank confirmed that the project will be completed in 2037 and will include eight Iraqi governorates .
The bank stated in a statement received by Shafaq News Agency, "Under this financing, the Iraq Railways Extension and Modernization (IREM) project will modernize the railway infrastructure and services between Umm Qasr Port in southern Iraq and Mosul in northern Iraq, contributing to reducing travel and transportation time, increasing freight volume, as well as improving infrastructure and sustainable transportation services and providing them to users and passengers ."
He added, "The Middle East is witnessing a significant boom in the development of regional railways, which enhances trade routes within the region and with Asia and Europe, and contributes to enhancing connectivity services and driving economic growth in the region. These regional initiatives include the Iraq Development Road , which was announced in May 2023 with the aim of transforming Iraq into a pivotal transportation hub by linking the Gulf region with Iraq, all the way to the Turkish border and from there to Europe ."
The bank also noted that, "Once connectivity to existing ports and infrastructure is enhanced, this route could significantly increase trade flows within Iraq and across the region. Given that Iraq's railway sector suffers from limited connectivity, poor repair and maintenance services, and a lack of funding, investments in the existing railway network are considered an essential first step towards enhancing connectivity at the national and regional levels ."
In this regard, the World Bank's Regional Director for the Middle East, Jean-Christophe Carré, said, according to the statement, "As Iraq transitions from reconstruction to development, enhancing trade and connectivity services can stimulate economic growth, create new job opportunities, and reduce dependence on oil. This project is of great importance in transforming Iraq into a regional transportation hub and achieving the goals of Iraq's development path, which are improving connectivity services, diversifying economic activity, and raising growth rates ."
He stressed that "the project will expand and modernize the railways in Iraq by rehabilitating and modernizing 1,047 kilometers of existing railway lines linking Umm Qasr Port to Mosul via Baghdad, in addition to supporting the modernization of the fleet of locomotives and train cars, renovating the maintenance workshop in Baiji, and purchasing the necessary equipment and spare parts. The project will also work to enhance private sector capital participation in the establishment of dry ports and logistics service centers that provide sustainable, highly skilled job opportunities. The project will also enhance railway safety by implementing a comprehensive safety management system, modernizing infrastructure, improving railway crossings, implementing community awareness campaigns, enhancing emergency preparedness, and training workers ."
The project will also include technical assistance to improve the institutional performance of the Iraqi General Railway Company, develop an action plan for railway sector reform, and identify opportunities for private sector participation. Additionally, the project will provide training programs for Iraqi General Railway Company employees and support women's participation in the sector, according to the statement .
He stressed that "the Iraqi General Railway Company will implement the project under the supervision of the Ministry of Transport. To support successful and rapid implementation, an international company will be contracted within the framework of the project to manage capital expenditures and support the Iraqi General Railway Company in its efforts to build institutional capacity to manage large capital expenditure programs and manage the implementation of project contract packages.
The project will also prioritize active participation by citizens and local communities, and establish a community-led planning and monitoring mechanism that enables citizens to receive regular updates on progress and express their opinions and feedback on implementation ."
He pointed out that "by 2037, the renovated railway line is expected to transport 6.3 million tons of domestic freight, 1.1 million tons of exports/imports, and 2.85 million passengers, including unpackaged primary commodities (such as grains or construction materials) and containerized goods (such as industrial and consumer goods). The railway will cross eight Iraqi governorates, enhancing integration across the federal Republic of Iraq and benefiting nearly 17 million people ."
The World Bank statement noted that "the project will shift freight traffic from trucks to trains, significantly reducing damage to roads and lowering annual maintenance costs. The project will create more than 3,000 full-time construction jobs over seven years. Once railway operations and sector-wide expansion work commence, the project is expected to create 21,900 jobs annually by 2024. " LINK
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Clare: Iraq faces a "golden opportunity" following the regional truce. Will it capitalize on it?
6/25/2025
Following the cessation of the 12-day war between Israel and Iran, Iraq has a "golden opportunity" to assume a pivotal role in the region. It can capitalize on the regional calm to reduce tensions, develop a new vision for its national security, and strengthen international and trade relations. This will have an initial impact on the Iraqi economy, according to observers.
However, translating this calm into real economic gains, according to observers, remains contingent on the Iraqi government's ability to accompany it with radical internal reform that ensures the rule of law and frees economic decision-making from the grip of militias. Otherwise, it will be little more than a truce that deprives Iraq of the opportunity to advance.
positive effects
In this context, the Prime Minister's financial advisor, Mazhar Mohammed Salih, said, "Regional calm in the Middle East, particularly among Iraq's neighbors, could have a direct and profound positive impact on the Iraqi economy."
Saleh explained to Shafaq News Agency, "The Gulf states, Turkey, and Iran may increase their investments in Iraq in the areas of infrastructure, energy, transportation, and agriculture, and provide Iraq with the opportunity for stability, especially to implement its geo-economic project, the 'Development Road' project."
He continued, "In addition to attracting Arab and foreign investments to operate in the industrial economic cities linked to the development project, we are working with minimal risk and the highest degree of stability. All of these factors are linked to the degree of stability in regional security and its repercussions on our country."
He asserts that "the more attractive and stable the investment environment becomes for foreign investors, the more costs will decrease as profit opportunities grow."
Saleh points out that "one of the best foreign investment opportunities, in addition to the development path, is competition for joint investment in natural resource sites (except for the oil and gas industry), as this is a promising vital field for investors."
"golden opportunity"
This is also the view expressed by Hussein Al-Sa'bari, the deputy chairman of the parliamentary investment committee, who said, "The regional situation has calmed down following the cessation of the war between Iran and Israel, and relations between Arab and regional states have become closer. Therefore, the Iraqi government must capitalize on this atmosphere to become a hub and a link between the parties, in order to ensure regional development."
Al-Sa'bari told Shafaq News Agency, "The current situation represents an opportunity for political development and international and commercial relations, which requires Iraq to assume its primary role in the region and capitalize on this golden opportunity."
Economic researcher Ahmed Eid agrees with Hussein Al-Saabari, stating that "the regional de-escalation between Iran and Israel presents an opportunity to reduce tensions in the region, which will initially have a positive impact on the Iraqi economy through reduced insurance and transportation costs, improved market sentiment, and relative stability in the dinar exchange rate. It may also contribute to reducing financial pressures on the general budget and boosting temporary investor confidence."
conditional economic gains
However, Eid noted in an interview with Shafaq News Agency that "translating this calm into real economic gains remains contingent on the Iraqi government's ability to accompany it with effective internal reform. External stability is important, but it cannot compensate for the rampant corruption in all Iraqi state institutions, which devours investment opportunities, paralyzes projects, and undermines the business environment."
He continued, "As for an increase in investments or a reduction in financial risks in Iraq as a result of this calm, yes, relatively speaking, but that depends on two factors: the duration of the stability and the extent to which investors are convinced that this calm is not temporary, and the second is the Iraqi government's ability to keep pace with this calm with internal reforms, such as improving the business environment and reducing security and militia interference."
He explains, "If this is achieved, regional calm could reduce Iraq's credit rating risks, thus encouraging some hesitant Gulf, Turkish, or Iranian investments, and enhancing opportunities for debt refinancing or obtaining international loans at lower interest rates."
strategic opportunities
Eid asserts that "Iraq possesses clear strategic opportunities, represented by expanding trade with neighboring countries (Turkey, Iran, and the Gulf), and attracting investments in renewable energy, particularly from European and Gulf companies that are monitoring the situation."
He added, "As well as reviving postponed projects such as the Basra-Turkey railway line or the Grand Faw Port, and utilizing Iraq as a transit corridor between the Gulf and Europe via the 'Development Road' project, and revitalizing the religious tourism sector and attracting visitors from Iran and the Gulf without security concerns."
Accordingly, Eid says, "External political stability is a necessary condition for attracting capital, but it is insufficient unless accompanied by internal reforms that guarantee the rule of law and free economic decision-making from the grip of armed groups. Any regional calm without radical internal reform will be nothing more than a temporary truce that deprives Iraq of the opportunity to rise."
A New Vision for National Security
The regional truce is not limited to economics, as military expert Alaa Al-Nashou explains, "The region is exposed to rapidly evolving events amid regional and international tensions, which requires Iraq to develop a new vision for its national security."
Al-Nashou explained to Shafaq News Agency, "Countries around the world rely on security capabilities, which include intelligence, accurate information, control, command, information security, facilities, and personnel. All of this enhances the country's national security. Therefore, Iraq needs a security vision related to a balanced foreign policy for the sake of common interests, and a rejection of interference and submission to any state."
The military expert asserts that "Iraq must build a future based on real security foundations that are linked to securing Iraqi society by strengthening cooperation with Arab, regional, and international national security." LINK