You change bank managers part of economic reform in Iraq?
You change bank managers part of economic reform in Iraq?
July 12, 2016, 7:45 am
Euphrates Center for development and strategic studies
The banking sector plays an important and significant in stimulating the economy and activate it when there is an appropriate environment for its business and when there are serious and sincere desire of management to improve the performance of the banking sector in General and the performance of each particular bank, however, that the lack of security stability and political chaos and widespread corruption, internal conflict and other factors which hinder the performance of the banking sector, and that's what make it worse is the absence of banking management in general or particular expertise, efficiency and professionalism in the management of banking activity.
Launch of economic reforms and flounder
On 9/8/2015 presented Prime Minister Haidar Al-Abbadi in the special meeting of the Cabinet the text first package of reforms that the Cabinet voted unanimously, and a third point was that package care focus of economic reform which provided in point (1) that "the crisis cell to make appropriate decisions to activate the movement of investment and stimulating the private sector through: activating loans to stimulate the economy in the country and run the unemployed, both approved by the cell in relation to the planned loans for the industrial sector and agriculture sector and the Housing and $ 5 trillion dinars, regarding small business loans amounting to trillion dinars. The Commission charged with developing mechanisms to make recommendations before the end of this week. "
Despite the Premier's approval on 6/9/2015 to launch industrial and agricultural loan mechanisms and housing at the Centre of economic reform dubbed (CBI loan program for 2015), it has not been executing this program yet, but the Central Bank announced on the 3rd of June, receiving applications from those interested in agricultural and industrial projects and housing during this month the banks will loan distribution to beneficiaries, in order to activate (this program) and the banking sector further advanced methods On bureaucracy and override the principle of quotas, that declared the information Office of the Prime Minister as a motive to change bank managers when he said "it's clearance (for a change of bank managers) which was released by order of Prime Minister came to confirm the curriculum reform in moving the wheel work in the banking sector, in conjunction with the launch of wider lending to industrial and agricultural and residential projects in the private sector, where advanced and transparent methods are based on the methodology of presentation and electronic tracking, and not according to the usual bureaucratic methods."
He also stated "I lent political sites and establish the technical and administrative Stara for years condoned the legitimate questions in basic qualifications to justify his important and sensitive sites, and successive attacks directed against high-calibre recruits are now offering substitute mess sharecropping, but understood the insistence on obstructing traffic in the direction of reform, and override sharing positions, more than intended Salah and institutions of the State" all this pushed Prime Minister Haidar Al-Abbadi to change bank managers.
Change the bank managers part of all
To change the bank managers is not sufficient to achieve economic reform in Iraq unless there is a comprehensive reform of the first self-reform aspects of the banking sector reform start of legislation and law reform and pursue implementation and monitoring, to work towards coordination – after changing the bank managers with questionable performance between private and Government banks on the one hand and between the Central Bank and on the other hand, to fix up to launch and conduct banking and implement plans to ensure that its deviation from what is decreed.
The second aspect is the substantive reform, any reform of each topic can affect the effectiveness of the banking sector with the exception of the reform, for example, the topic of instability adversely affect banks ' performance, since the occupation of some provinces of Iraq and the Islamic State to gangs that hold provincial residents drain issue borrowers to amounts owed to banks, as well as theft of ISIS to customer deposits in those banks, some sources indicate that the money that he stole from banks reached one billion dollars, rising Relative risk of lending to customers than banks befuddled, and this has an effect on deposits in other provinces because customers in these provinces will pull the most filings in anticipation of any emergency happens, and so for financial corruption and such internal strife and political chaos and lack of awareness in the community and decrease the role of the private sector in the Iraqi economy and stricter tax laws affecting borrowers. Etc.
Apparently, change bank managers came as a result of the collision of economic reform is not an obstacle to bank financing that the Central Bank released (CBI loan program for 2015), which was worth 6 trillion Iraqi dinars, but banks banking President (agricultural, industrial and housing estate and Mesopotamia and rational) are the reason for the delayed economic reform causing an intensification of Iraq, whose economy downturn in economic growth and increase unemployment, if implemented the program without colliding with the Banking Department of unemployment declined To low levels and increase economic growth by production industries and not rely on oil revenues, and thus are on the right direction to diversify Iraq's economy, by virtue of the loan programme plan were concerned with agricultural and industrial side side too heavily.
Specialized banks ratios of 5 trillion dinars
If the total percentage loans to large and medium-sized enterprises within the specialized banks as the agricultural and Industrial Bank 66% and 33% of each amount to support those projects of 5 trillion dinars, while the total percentage of loans intended for medium and large enterprises, but also within the real estate Bank and 34% of housing fund that amount and each 17%, in order to support the Iraqi economy and addressing cases of recession and lack of liquidity and stimulate real growth by pumping money into the Iraqi market by those specialized banks, raising Rates of production in the agricultural and industrial sector and the establishment of residential projects that contribute to the development of the infrastructure of the Iraqi economy.
Since one of the objectives of the Government loan program is to develop small projects list, and also create new projects to support productive projects and small and medium-sized companies, have been allocated $ 1 trillion Iraqi dinars to support these projects and are distributed through banks and interest of 4% Note that the loan is granted for purchasing residential units and repair as the housing sector projects was covered in large and medium-sized enterprise loans. The target groups within the small projects include business, trade, industry, hotels, restaurants, shops, supermarkets and commercial centers and workshops of various kinds. And advantages of this program to cover all provinces of Iraq with fast approval loan, plus low interest rates.
And conclusion of optimism, it is fortunate that the delayed implementation of the Central Bank's loan program for 2015 because of quotas, bureaucratic control and other directors of banks, came to coincide with the strategic plan 2016-2020 launched by CBI, so use these loans to build a free market economy based on market forces and competition, enabling the private sector to play a fundamental role in the economic development plan in the light of the objectives contained in the Central Bank law to form the basis of domestic price stability and maintain Fixed and financial system to promote sustainable development, employment and prosperity in Iraq. The plan also paid great attention to the control and supervision of the banking sector-achieve reform – to build efficient and effective banking sector operates on the basis of best practices from the fact that this sector includes banks, founded mostly during the past few years and is still far from modern standards and practices and the diversity of its activities, as well as the lack of modern techniques and systems software and qualified personnel.
* The Euphrates Center for development and strategic studies/2004-contents 2016