From Washington: A new banking and economic reform package for Iraq

The Iraqi delegation participating in the banking reform conference in Washington, D.C., on the sidelines of the International Monetary Fund and World Bank meetings, announced a new package of banking and economic reforms on Saturday aimed at strengthening the stability of the financial system and attracting investment.

“The government has implemented a series of steps as part of the economic and financial reform program, most notably the implementation of comprehensive strategic banking reforms in cooperation with the Central Bank of Iraq and international consulting firms, as well as the preparation of a three-year budget for the first time in Iraq’s history to ensure stable financial planning that attracts investment,” said Saleh Mahoud Salman, an advisor to the Iraqi Prime Minister, according to a statement received by Shafaq News Agency.

He added that “automating the customs system through the implementation of the United Nations ASYCUDA program has led to a significant increase in customs and tax revenues, the restructuring of government banks (Rafidain, Rasheed, Industrial, and Agricultural) and increased their operational efficiency, as well as the expansion of electronic payment systems and increased financial inclusion from less than 10% to more than 40% within two years.”

Salman continued, “Support programs have been launched for small and medium-sized enterprises to create job opportunities and stimulate the local economy,” noting that “these steps represent a pivotal stage in the economic reform process, and that the government will continue to support the development of the banking sector in cooperation with international institutions.”

Prior to this, the Central Bank of Iraq announced new instructions to all authorized banks in the country regarding money transfers and customs clearance procedures related to the requirements for the approval of special commercial invoices, with the aim of curbing currency smuggling.

This measure comes as part of the efforts of the Central Bank of Iraq and government agencies to develop the financial and administrative environment and improve the level of oversight and compliance with international standards in foreign trade.

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Iraq’s foreign exchange reserves fell by more than $2 billion in one month.

The Central Bank announced on Saturday that its foreign exchange reserves had fallen to more than $2 billion by the end of July.

The bank said in an official statistic seen by Shafaq News Agency, “The foreign reserves of the Central Bank amounted to 94.714 billion dollars, equivalent to 123.128 trillion Iraqi dinars, as of July 31 of this year, a decrease of 2.305 billion dollars compared to last June, when reserves amounted to 97.019 billion dollars, equivalent to 126.125 trillion dinars.”

He added, “These reserves also decreased from last May, which amounted to $96.799 billion, equivalent to 125.839 trillion dinars.”

The bank indicated that “these reserves decreased from last year’s 2024 figure of $100.276 billion, or the equivalent of 130.347 trillion dinars, and decreased from 2023, when reserves reached $111.736 billion, or the equivalent of 145.257 trillion dinars.”

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Central Bank Governor: Iraq’s internal and external debts amount to approximately $150 billion

Central Bank Governor Ali Al-Alaq said that Iraq’s internal and external debt has reached approximately $150 billion, in response to a parliamentary question directed to him by MP Raed Al-Maliki.

In a statement issued on Saturday, Al-Maliki quoted Al-Alaq as saying that Iraq’s internal debt had risen to 91 trillion dinars, and its external debt had reached $54 billion.

He added that the budget deficit is too large to be covered by loans and bonds, noting that “there are no restrictions on the US Federal Reserve’s use of oil revenues.”

According to Al-Alaq, “The value of the bonds that Iraq purchased in the United States amounted to $11 billion.”

Meanwhile, MP Hadi Al-Salami announced that the Federal Court has initiated a questioning process with the House of Representatives against Prime Minister Mohammed Shia al-Sudani over his failure to submit the budget tables and final accounts for 2025.

The Central Bank of Iraq announced last Saturday that Iraq’s domestic debt had increased for the month of July 2025.

The bank stated in a report seen by Shafaq News Agency that “Iraq’s domestic debt rose in July to 90.30 trillion dinars, an increase of 2.91 percent compared to last June, which reached 87.74 trillion dinars.”

He added, “The debt also increased by 16 percent compared to the same period last year, reaching 76 trillion dinars.”

The bank indicated that “the reason for the increase in domestic debt is due to a 1.72 percent decrease in government bank loans in July compared to June.”

It’s worth noting that the Echo Iraq Observatory previously considered that oil sales were no longer sufficient to cover the state’s monthly running expenses, which amount to approximately 11 trillion Iraqi dinars.

The observatory stated in a press statement received by Shafaq News Agency that “current expenditures represent the largest portion of the state’s expenditures, amounting to 11,503,656,980,146 dinars,” indicating that “this amount, out of a total of 27 trillion dinars, represents the total expenditures of the licensing rounds, the Chinese agreement, and investment.”

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Government Financial Advisor: The Ministry of Finance has begun preparing the 2026 budget.

The Prime Minister’s Financial Advisor, Mazhar Mohammed Salih, confirmed on Saturday that the Ministry of Finance has begun preparing the 2026 budget, while specifying the disbursement mechanism in the event that the budget cannot be approved. Salih told the official agency, “In accordance with the Federal Financial Management Law No. 6 of 2019, as amended, the Federal Ministry of Finance is proceeding with preparing the draft federal general budget law for the country for the fiscal year 2026.”

He pointed out that “in the event that it cannot be approved within the specified constitutional or legislative timeframes due to the upcoming parliamentary term, the government will undertake disbursements in 2026 on a monthly basis at a rate of 1/12 of the actual current expenditures for the year 2025, including spending on ongoing investment projects, external obligations, and other due expenses.”

He also stated that “the Financial Activity will continue to manage revenue collection and continue disbursing through the expenditure items specified under the aforementioned Federal Financial Management Law until the 2026 budget is approved by the House of Representatives. At that point, allocations will be released for any activities required by economic growth and sustainable development, including new investment projects and other emerging commitments.”

Burathanews.com

Rafidain Bank suspends loan applications from parliamentarians and employees.

An informed source revealed on Thursday that the government-owned Rafidain Bank has suspended applications for loans and advances allocated to employees, retirees, and members of the Iraqi parliament.

The source told Shafaq News Agency, “Many requests for loans and advances for employees and retirees have been suspended, especially those that were months old and have not been granted.”

The source revealed that “some parties are favored over others in the granting process, based on favoritism and nepotism.”

The source pointed out that “the bank is relying on paper-based transactions for granting loans and advances instead of the announced electronic system, which has angered employees and retirees.”

Since 2023, Rafidain Bank has begun disbursing installments of “loans for employees, members of the Interior and Defense Ministries, and retirees” electronically, directly via MasterCard, after completing the requirements. The disbursements are at an interest rate of approximately 5% per annum, with a repayment period of up to five years (60 months).

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The International Monetary Fund expects Iraq’s economy to grow by 3.6% next year.

The International Monetary Fund (IMF) forecast on Thursday that the Iraqi economy will grow by 3.6% in 2026, amid improved economic performance in the region and rising investment and production levels.

The Fund’s forecasts were included in its report on the regional economic outlook for the Middle East and North Africa, which noted disparities in growth rates among countries due to differences in economic conditions and financial policies in each.

According to the report, Sudan topped the list of the highest-growing countries in the region, with a growth rate of 9.5%, followed by Qatar with 6.1%, the United Arab Emirates with 5%, and Egypt with 4.5%.

Mauritania followed with a growth rate of 4.3%, followed by Morocco with a growth rate of 4.2%, while Saudi Arabia and the Sultanate of Oman recorded an expected growth rate of 4% each.

Kuwait is expected to achieve growth of 3.9%, Iraq 3.6%, followed by Bahrain 3.3%, while Algeria and Jordan will achieve similar growth rates of 2.9%. Tunisia comes in last in terms of expected growth of 2.1%.

The IMF indicated that these forecasts depend on continued stability in oil prices, improved non-oil activity, and the implementation of economic and structural reforms aimed at enhancing productivity and diversifying sources of income in the region’s countries.

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Prime Minister’s Advisor: The Central Bank is leading a comprehensive shift towards reform.

The Prime Minister’s Financial Advisor, Mazhar Mohammed Salih, confirmed on Thursday that Iraq’s commitment to international standards paves the way for the return of dollar transactions, attracting foreign investment, and expanding financial inclusion. He stressed that the path of banking reform is ongoing and irreversible. Salih told the official agency, “Iraq’s commitment to international standards and banking transparency means that the Iraqi financial system has entered a phase of radical reform, which enhances international confidence and qualifies it to be an active player in the global economy.” He pointed out that “the most prominent gains are not limited to the return of dollar transactions to national banks, but also include attracting investment and expanding financial inclusion.”

He added, “Adherence to international standards requires that banking institutions adhere to anti-money laundering and counter-terrorism financing rules, implement transparent accounting and oversight systems, and digitally transform the banking infrastructure, including electronic payment systems and unified financial reports.” He continued, “This also includes openness to sound international financial services by contracting with global companies to develop banking systems, particularly financial auditing and financial technology companies.” He added, “This commitment places Iraq on the map of the global financial system and gives it an opportunity to integrate with international correspondent banks.”

He also explained that “the gains that will benefit Iraq will also lead to the restoration of dollar transactions with international banks, after some Iraqi banks were deprived of them due to poor compliance issues. This will also attract foreign investment, as investors seek a transparent and secure financial environment. It will also enhance financial inclusion by integrating broad segments of citizens into the banking system through digital services. This will also improve Iraq’s credit rating, which will positively impact its ability to obtain international financing on better terms.”

He also pointed out that “enhancing confidence in the Iraqi banking system is achieved through the confidence of international banks that will deal with the modernized banking system, which is compatible with international standards, which opens the door for Iraq to deal with correspondent banks in Europe and America. The Iraqi citizen’s confidence in the modernized banks is also increasing, and he begins to feel safe dealing with them, especially with the development of electronic services and the reduction of risks, in addition to the confidence of international companies contracting with Iraq, which are looking for a transparent financial environment that guarantees the integrity of transfers and contracts.”

He pointed out that “the level of progress in the field of banking reform, sponsored by Prime Minister Mohammed Shia al-Sudani within the government’s program and its implementation, and in cooperation with the Central Bank of Iraq, came in accordance with the 2025 Banking Reform Document.”

He stated, “The Central Bank of Iraq is leading a comprehensive shift towards reform, including increasing capital in agreement with the banking system and implementing comprehensive governance.”

He also explained that “the development of modern digital systems is no longer an option, but a necessity. This has already begun in some leading banks, despite ongoing challenges, such as historically weak trust and varying levels of preparedness among banks.” He emphasized that “the reform path is clear and irreversible.”

Burathanews.com

Al-Badri: The government is ignoring the inclusion of the salary scale in the three-year budget.

Representative Ahmed Al-Badri confirmed, on Monday, that the unified salary scale law will not be part of the three-year budget, expressing his surprise at the government’s failure to fulfill its previous pledges to include it in the draft budget.

Al-Badri said in a statement to / Al-Maalouma /, “There is widespread controversy in parliamentary and popular circles about the unified salary scale law in light of ongoing demands for justice for low-income groups,” noting that “Prime Minister Mohammed Shia Al-Sudani had promised to include the law in the three-year budget items, but this has not happened yet.”

He added that “the government has not fulfilled its previous promises despite the importance of the law in addressing the large disparities between state employees,” noting that “postponing the inclusion of the law raises question marks about the government’s intention to achieve job justice.”

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Al-Maliki’s coalition: The “entity’s” presence does not prevent Iraq’s participation in the Sharm el-Sheikh summit.

The State of Law Coalition, led by Nouri al-Maliki, sent a letter to Prime Minister Mohammed Shia al-Sudani on Monday regarding his participation in the Sharm el-Sheikh summit.

“The Sharm el-Sheikh conference was called for by Egypt and the United States to arrange the situation in the Middle East, similar to the US president’s initiative to stop the war in the stricken Gaza Strip,” coalition MP Ammar al-Shabli told Shafaq News Agency. He stressed that “it is an international summit, and Iraq is part of the Middle East, and its security is linked to the security of neighboring countries, most of which will be present. The presence of the entity’s president will not affect Iraq’s position.”

Al-Shabli explained that “Iraq has attended many summits with the presence of a representative of the entity, as these are international summits, and Iraq has no choice but to exclude any delegation from them. Therefore, we call on Al-Sudani to condition his participation on preserving Iraq’s sovereignty and security.”

Al-Shabli also stressed the need to “obligate participating countries and delegations to respect Iraq’s sovereignty and security, and to use the summit to pressure Turkey to cease its violation of international law regarding the presence of its forces on Iraqi territory and to respect Iraq’s right to its water share.”

He added, “Al-Sudani must also compel countries that continue to harbor terrorists and their supporters to cease harboring such individuals and hand over those against whom judicial rulings have been issued to the competent Iraqi authorities.”

Iraqi Prime Minister Mohammed Shia al-Sudani departed for Egypt on Monday morning to participate in the Sharm el-Sheikh Peace Summit, convened by the United States and Egypt. The summit will discuss efforts to end the war in Gaza, launch a political process, and enhance the delivery of humanitarian aid. More than 20 world and regional leaders will be in attendance, including the UN Secretary-General and several leaders of major powers.

The Prime Minister’s advisor for foreign affairs, Farhad Alaa Al-Din, confirmed to Shafaq News Agency that Iraq is participating in the Sharm el-Sheikh summit after receiving an official invitation from the United States and Egypt, as it chairs the current session of the Arab Summit and plays an active role in the fateful issues of the Arab nation.

Shiite National Movement leader Muqtada al-Sadr described Prime Minister Mohammed Shia al-Sudani’s participation in the Sharm el-Sheikh summit as a “disgrace,” arguing that it could pave the way for normalization or the signing of the so-called two-state solution. He asserted his innocence of this position.

Shafaq.com

Iraq is in a critical situation as the Mosul Dam approaches its “dead reservoir.”

Water expert and former director of the Mosul Dam, Riyad Ezz El-Din Al-Naimi, warned on Monday of the seriousness of the water situation in Iraq in general, and the Mosul Dam in particular.

According to Al-Naimi, who spoke to Shafaq News Agency, “The water levels in the dam have reached very low levels, approaching ‘dead storage,’ which is unprecedented in more than fifty years.”

He explained that Iraq is experiencing an unprecedented water crisis in over 100 years, due to the lack of rainfall, the scarcity of water imports from Turkey, and the effects of climate change. He noted that the current water reserves in the Mosul Dam do not meet even the minimum needs.

Al-Naimi emphasized that Iraq’s negotiating partner is strong and intelligent, which requires a more assertive negotiating stance from the Iraqi government and the Ministry of Water Resources. He believed that the continued decline in water imports would place the country in a very difficult water crisis, particularly in the Tigris River and the eastern regions.

Iraqi Minister of Water Resources, Aoun Diab Abdullah, revealed on Sunday that Iraq has requested that Turkey increase water flows from the Tigris and Euphrates rivers by one billion cubic meters per second for October and November, at a rate of 500 m³/s for each river, to improve water revenues over the next fifty days.

On Saturday, Iraqi Prime Minister Mohammed Shia al-Sudani revealed an imminent agreement with Türkiye to build dams and address the water crisis, while attacking “false mongers” seeking to achieve partisan gains.

On Friday, October 10, a joint official meeting was held in Ankara between delegations from the Republic of Iraq and the Republic of Turkey to discuss the water issue and enhance bilateral cooperation in this vital field, according to a statement issued by the Iraqi Foreign Ministry.

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