British report: Modernizing Iraq’s underdeveloped banking system is a priority.
The British magazine “Global Finance” revealed on Thursday that economic diversification in Iraq is limited, considering that modernizing the “backward” banking system is a priority for the country.
In a report on the performance of central banks in the Middle East, seen by Shafaq News Agency, the magazine said, “Iraq’s GDP growth is expected to recover in 2025 after two consecutive years of recession, driven primarily by a recovery in oil production.” It noted that “the economy remains heavily dependent on hydrocarbons, which constitute 95% of government revenues, making it vulnerable to fluctuations in global oil prices.”
She added, “Although economic diversification has long been on the agenda, real progress has been limited. In response, the Central Bank of Iraq is promoting what it describes as ‘developmental central banking,’ focusing on directing credit toward strategic sectors, such as agriculture and industry, to expand the country’s economic base.”
The report explained that “modernizing Iraq’s underdeveloped banking system is another priority. Reforms are underway in state-owned banks, along with initiatives aimed at reducing the use of cash.”
In May 2024, new regulations were issued for digital banks and electronic payment companies, prompting several new players to enter the market.
According to the report, “Despite efforts to combat money laundering and terrorist financing, the Central Bank still faces severe compliance challenges, and many Iraqi banks remain restricted from dollar transactions due to concerns about illicit financial flows to sanctioned entities.”
The magazine noted in its report that “in early 2025, authorities uncovered a new scheme involving prepaid Visa and Mastercard products used to transfer funds to Iranian-backed militias. In response, the Central Bank of Iraq set a monthly cross-border transfer cap of $300 million and capped individual cardholder transactions at $5,000.”
Shafaq.com