Geopolitical Tensions Push the Dollar Higher - But Iraq Says It’s Stable

Geopolitical tensions are disrupting the exchange rate... but the Central Bank says it remains stable and unchanged.

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The exchange rate of the US dollar is witnessing a continuous rise against the Iraqi dinar in the markets of Baghdad and all Iraqi governorates, where the exchange rate of 100 dollars has reached more than 151,500 Iraqi dinars.

Economic expert Shwan Hadi said that the Central Bank of Iraq confirmed that the dollar exchange rate is fixed and has not changed, but the dollar price is constantly rising.

Hadi attributed the rise to geopolitical tensions in the world and the Middle East region in particular, explaining that the dollar's price is likely to rise further if these tensions continue.

He indicated that it is hoped that the dollar exchange rate will stabilize with the formation of the new federal government in Iraq and the stabilization of the political situation in the region.

Iraq has ‘huge plan’ to transform banking sector, says CBI governor

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Ali al-Alaq told The New Region that citizens must not "rush to the market" amid a rise in unofficial dollar prices, insisting that the Central Bank is maintaining foreign reserves "at a very good level."

ERBIL, Kurdistan Region of Iraq – Central Bank of Iraq (CBI) Governor Ali al-Alaq told The New Region on Wednesday that Baghdad has a "huge plan" to change the banking sector in the next few years, reassuring the Iraqi population that the value of the Iraqi dinar compared to the US dollar is under control.

 

Alaq urged the Iraqi people to "calm down" and not to "rush to the market," amid a recent soaring rise in unofficial dollar prices, going from around 1,420 dinars per $1 in the black market to 1,570, before settling around 1,500. In comparison, the CBI has set the value at 1,300 dinars per $1.

 

The fluctuations have created uncertainty and unrest in the Iraqi market, with several videos circulating on social media showing people rushing to currency exchange centers across the country. In response to a question by The New Region regarding a potential problem with the Iraqi dinar's value, Alaq asserted, "not at all."

 

"We have foreign reserves at a very good level," Alaq said, reassuring that "we are not in a position that we cannot respond to these demands on the American dollars" as Baghdad has purchased large quantities of gold.

 

The interview came during the launch event of the Kurdistan Regional Government's (KRG) e-Psule initiative, a platform that will allow users to pay their utility bills electronically through several wallets and banks that have participated in the program. 

 

Alaq praised the KRG's initiative, saying, "It won't change everything, but it will change something for sure."

 

"Especially, like, when you offer new tools for people, new technology, easy to use and you will save money, you will save time, ... I think you will attract more and more people," the CBI governor said, lauding Kurdistan Region Prime Minister Masrour Barzani's "vision" and "will" toward a cashless economy for the Region. 

 

Speaking to Iraq's broader strides toward a better banking sector, Alaq said that Baghdad and Erbil are in "close coordination," adding that "the plan we have, really, it's a huge plan. It will change the whole sector."

 

"We expect that in two or three years we will see a totally different sector," he stressed. "I think one of the biggest plans within the country in general. So, we are very optimistic about the plan."

 

In late September, CBI announced a plan to end cash payments in government institutions by July 2026, as part of a nationwide shift to electronic payments. 

 

“Iraq will completely eliminate cash transactions in state institutions and other facilities by July of next year,” Dhurgham Musa, director of supervision over non-banking financial institutions at CBI, told the state newspaper in September.
 
The plan is being carried out under the direct supervision of Prime Minister Mohammed Shia’ al-Sudani and other government ministries, according to Musa, adding that trillions of dinars have already been paid electronically and the interior ministry has completely halted the use of cash.

An analysis of the Central Bank Governor's visit to Erbil and the prospects for financial stability between the central government and the Kurdistan Region.

 

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Iraq is living through a pivotal moment at the beginning of 2026, teetering between aspirations for reconstruction and the specter of political deadlock. While political forces in Baghdad struggle to unravel the complexities of forming a new government after a difficult electoral process, the relationship between the federal capital and the Kurdistan Region stands out as the most crucial barometer for measuring the state's ability to remain a unified and strong entity. Iraq's stability today is not merely measured by resolving fleeting disputes, but by building functional bridges that transform administrative pluralism into a comprehensive strategic strength.

The current reality and the contradictions of the constitutional path

Iraq is experiencing a fragile stability; on the one hand, there is a construction boom and major strategic projects underway, while on the other, gaps in the implementation of the constitution have led to divergent positions between Baghdad and Erbil. The delay in enacting the federal oil and gas law and the ongoing controversy surrounding the salaries of the region's employees represent the most significant constitutional violations, threatening social peace. These contradictions are no longer merely legal issues but have become ingrained obstacles that prevent the state from fully realizing its potential.

E-Passola: Digital Trust Protocol and Building Shared Sovereignty

Amidst this political turmoil came the significant initiative of the Prime Minister of the Kurdistan Region, Mr. Masrour Barzani, launching the E-Psule electronic payment system, with the notable presence of the Governor of the Central Bank of Iraq, Mr. Ali Al-Alaq. This event was not merely a technological update, but a platform for a sovereign declaration of the birth of a unified financial communication language between Baghdad and Erbil, carrying messages of paramount importance.

Mr. Masrour Barzani demonstrated astute diplomacy by clarifying that the e-Basula document is a transparency initiative presented by the region to the central government and the international community. His message was unequivocal: "We are establishing a financial environment that leaves no room for misinterpretation, and we are using technology to eliminate all pretexts that were previously used to obstruct our people's rights. We affirm that the region's success in digitalization strengthens and supports the federal financial system." In contrast, Mr. Ali Al-Alaq's remarks offered a clear institutional recognition, viewing the region's digitalization not as financial independence but as a cornerstone of national sovereignty. He emphasized that aligning the region's systems with the Central Bank's standards is the only path to achieving financial inclusion and protecting the Iraqi economy, considering the region's experience a successful model to be emulated in fostering trust between monetary and financial authorities.

Government formation crisis and fears of a power vacuum

The real concern is that the deadlock in Baghdad will weaken the national position in the face of regional challenges. Iraq will only be secure if the Kurdistan Region transforms from a party expected to make concessions into a partner expected to contribute to the solution. Any attempt to weaken the region's financial or security standing necessarily weakens the Iraqi state, while security integration between the army and the Peshmerga is the only guarantee against the resurgence of terrorist organizations in areas of power vacuum.

Analytical vision: Changing mental technique

Experts and researchers indicate that the greatest obstacle to a strong Iraq is not a lack of resources, but a crisis of confidence. The only way forward is to shift from a zero-sum mentality, where some perceive regional strength as a weakness of the central government, to a mindset of mutual benefit. The regional model for attracting foreign investment and building digital institutions should be viewed as a bridgehead through which the country can move toward economic modernization.

Our concluding message is that Iraq's strength lies not in the subjugation of one party to another, but in the partnership of powerful nations; Baghdad being the constitutional and political heartland, and Erbil the engine of development and technology. E-Basoula has successfully forged a common language, with Erbil offering digital transparency in exchange for Baghdad's sovereign trust. Let us make this technological collaboration the beginning of a stable digital republic and demonstrate to the world that Iraq is strong in its diversity and resilient in its constitutional unity.

Details of the meeting between Maliki and Sudani

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Prime Minister Mohammed Shia al-Sudani met on Wednesday (February 11, 2026) with Nouri Kamel al-Maliki, head of the State of Law Coalition, to discuss the overall general situation and the course of dialogues between political forces regarding the upcoming constitutional entitlements.

The Prime Minister's Media Office said in a statement received by "Baghdad Today" that "the meeting witnessed a review of the understandings and dialogues between the national forces, and the efforts made to reach a political agreement that completes the selection of the President of the Republic in the House of Representatives, and proceeds with the rest of the constitutional entitlements."

The statement added that “Al-Sudani and Al-Maliki discussed the positions of the political blocs on the current course, in addition to emphasizing the government’s continued work to meet the requirements of services and development, and to strengthen the national economy in light of the current political circumstances.”

Without the phrase "Prime Minister's Office"

Sudani cuts off attack against Maliki... Nighttime visit to discuss "the continuation of the government"

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Amid a storm of criticism facing Nouri al-Maliki, the prime ministerial candidate of the Coordination Framework, Prime Minister Mohammed Shia al-Sudani cut short the analyses questioning his supportive stance towards al-Maliki, and made a late-night visit to the latter's office.

 

The media office of Prime Minister Mohammed Shia al-Sudani announced a visit he made to the office of Nouri al-Maliki, the candidate of the Shiite Coordination Framework. Al-Sudani's statement did not refer to the phrase "the Framework's candidate for Prime Minister," but rather described al-Maliki by his party title, "Head of the State of Law Coalition." The statement also touched on the presidency without mentioning the issue of the premiership and the objections it faces after US President Donald Trump rejected al-Maliki's nomination, and the subsequent similar stances taken by Qais al-Khazali, leader of the Asa'ib Ahl al-Haq movement, and Ammar al-Hakim, leader of the Hikma Movement. The statement did not address the numerous analyses that indicated a resurgence in al-Sudani's chances coinciding with the wave of rejection facing al-Maliki.

Sudani’s visit comes amid a storm of reactions sparked by Maliki’s remarks on Wednesday about the need for “one army” in Iraq and that “talk about dissolving or integrating the Popular Mobilization Forces must be exclusively in accordance with the constitution.” This has angered a number of factions within the resistance axis, who have continued to launch an unprecedented attack on Maliki during these hours, going so far as to say that he has made a mistake that could lead him to the same fate as former prime minister-designate Adnan al-Zurfi.

The statement from the Prime Minister's office was far removed from all of that. It focused on the fact that Al-Sudani and Al-Maliki discussed "the government's continued fulfillment of service and development requirements and strengthening the national economy," which may be consistent with calls circulating to extend Al-Sudani's term to manage affairs until the parties find a way out.

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Mamouzini told Al-Mirbad: The meeting between the two Kurdish parties ended today without an agreement on a presidential candidate.

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Kurdistan Democratic Party (KDP) leader Saeed Mamouzini stated that today's meeting between the two Kurdish parties did not result in a joint statement or an agreement on a candidate for the presidency.
Mamouzini told Al-Mirbad that the meeting between his party and the Patriotic Union of Kurdistan (PUK), held in the Salah al-Din resort, concluded without a joint statement. He noted that the meeting was attended by KDP leader Masoud Barzani, PUK leader Bafel Talabani, and other leaders from both parties, but no formal agreement was reached regarding a presidential candidate.

SOMO is moving towards global oil trading.

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The Iraqi Oil Marketing Company (SOMO) is moving towards a qualitative shift in its operations, from simply selling crude oil through traditional outlets to entering the field of trading in global oil markets. The company's management described this move as aiming to maximize revenues and seize opportunities in a rapidly fluctuating market, while oil experts warned of the risks of this step if the appropriate institutional and legal environment is not prepared for it.

 

The Director General of the Oil Marketing Company, Ali Nizar Al-Shatri, told Al-Sabah that the company is currently studying mechanisms for transitioning from the traditional sales model to a trading model, in line with Iraq’s economic interests, noting that this approach comes within a vision aimed at maximizing oil revenues and not limiting marketing operations to Iraqi ports only.

Al-Shatri explained that the company seeks to enter into positive partnerships with reputable international companies that have extensive experience in the field of oil trading, indicating that the latest of these moves was the negotiation with the global company “ExxonMobil”, to enter into an advanced commercial partnership that contributes to developing the staff of “SOMO”, and building a marketing and commercial arm capable of interacting with the changes of the global market and seizing the available opportunities.

He pointed out that global oil markets suffer from clear weaknesses in some of their joints, but SOMO is working to invest in the available strengths through these partnerships, enabling it to move from the role of seller to a more effective player in the international oil trading system.

Conversely, experts believe that this shift, despite its importance, requires extreme caution and well-considered measures. Oil expert Yahya Nasser Al-Aqabi emphasized that SOMO's transition from traditional sales to trading in global markets is not merely an administrative step, but a sovereign decision with significant implications for state revenues and financial sustainability.

Al-Aqabi explained that the current sales model adopted by SOMO is based on selling oil from Iraqi ports at prices linked to global indicators, with relatively limited exposure to risks, while entering the field of trading represents a completely different activity, requiring independent institutions with strict systems and expert management capable of dealing with price fluctuations and market risks.

He added that SOMO, as a company affiliated with the Ministry of Oil, may not currently possess all the institutional capabilities necessary to undertake this type of complex activity, warning that any ill-considered step could be fraught with risks. He cited the experiences of oil-producing countries and national oil companies belonging to OPEC member states, where success was achieved when independent commercial arms were established under clear oversight and professional management.

Al-Aqabi stressed the need for any such transformation to be gradual and deliberate, starting with limited steps whose results are carefully evaluated, before moving to a wider scope. He pointed out that any serious project in this direction needs financial and administrative independence, and a complete separation between political decision-making and commercial activity, warning that ambitions not supported by building strong institutions may turn from a tool for maximizing revenues into a gateway to losses.

For his part, oil expert Kovind Shirwani warned of the risks of SOMO entering the oil speculation market, especially with regard to forward contracts, considering that this step could constitute a major gamble for a government company suffering from red tape and bureaucracy.

Sherwani explained that speculative activity is mostly suitable for private trading companies, or speculators who have high flexibility in decision-making, even if they do not have great financial efficiency, but the entry of a large government institution like “SOMO” into this field requires double caution, especially in light of the current indicators that point to a relative weakness in the global oil market.

He stressed that any move towards trading must be preceded by comprehensive preparation and a careful study of potential risks, in order to avoid exposing oil revenues, which form the backbone of the Iraqi budget, to unforeseen fluctuations.

While this step represents a legitimate ambition to maximize state resources, its success remains contingent on Iraq’s ability to build flexible, independent oil institutions governed by strict governance systems that ensure revenue protection and financial sustainability, away from reckless adventures.

Iraq is preparing to export its oil via Türkiye, Jordan, Egypt, and Saudi Arabia... Syria is on hold.

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The Ministry of Foreign Affairs announced on Thursday plans for external oil connections with four countries: Turkey, Jordan, Egypt, and Saudi Arabia. It noted that work on the Kirkuk-Banias pipeline has been postponed due to the situation in Syria, as the ministry explained that the security situation in Syria prevents Iraq from taking actual steps to restore the pipeline.

The Undersecretary of the Ministry, Hisham Al-Alawi, said in a statement to the official agency, which was followed by the 964 network , that “work on the Kirkuk-Banias pipeline has been postponed due to the security situation in Syria, which prevents us from taking actual steps in this direction,” indicating that “Iraq has several alternatives for external oil connections, including through Turkey and Jordan to Egypt, in addition to Saudi Arabia.”

He added that “the Iraqi government has worked over the past years to rehabilitate the oil export pipeline through Turkey, and there are talks with Jordan and Egypt,” noting that “Iraq has adopted the project to link the oil fields through Haditha, and discussions were about implementing a project to complete this link through Jordan to Egypt, but work on that has not started.”

"Outside the constitution": An expert refutes the proposal to extend the caretaker government.

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A legal expert confirmed on Thursday that the 2005 Iraqi constitution contains no provision allowing the extension of a caretaker government, considering any attempt in this direction to be a departure from the principle of the rotation of power.

Earlier, a source within the coordination framework revealed to Shafaq News Agency that caretaker Prime Minister Mohammed Shia al-Sudani had received a proposal to extend his government’s term for one year with specific powers, with the aim of finding a way out of the political deadlock.

According to the source, the proposal will be discussed with the framework leaders in upcoming meetings, amid expectations of differing positions between those who support and those who reject it.

Legal expert Salem Hawas told Shafaq News Agency that "the constitution is completely devoid of any provision that permits the extension of a caretaker government," explaining that this government is "temporary and restricted by necessity and does not have full authority," and that its continuation is "exclusively linked to the completion of constitutional requirements, not to political agreements or circumstantial desires."

He added that "the House of Representatives does not have the authority to extend the term of the executive authority beyond the constitutional terms, because that would be considered an indirect amendment to the constitution," noting that "the President of the Republic cannot create a term not stipulated, and the Council of Ministers does not extend its own term."

He added that "the Federal Supreme Court's role is interpretive and supervisory, not constructive, and it does not have the power to create a new mandate."

Hawas stressed that “any extension means the continuation of a government with limited powers, which keeps essential decisions, appointments and major contracts subject to constitutional challenge,” stressing that “turning a temporary necessity into a permanent reality deepens the vacuum and does not solve it, and directly clashes with the principle of the rotation of power within specific periods that do not accept disruption or circumvention.”

Al-Sudani had resigned last Sunday (February 8) from his membership in the House of Representatives, after winning the last parliamentary elections that took place in October 2025, and obtaining more than 92,000 votes personally, while his alliance as a whole achieved more than 400,000 votes, with 46 seats.

Al-Maliki reiterated his commitment to running for the position of Prime Minister in the next government, despite American rejection of this, stressing that the selection of the Prime Minister is a national matter subject to the will of the people and constitutional institutions.

It is worth noting that the US State Department revealed to Shafaq News Agency last Thursday a firm and strongly worded stance regarding the upcoming political alliances map in Iraq, stressing that the US administration is prepared to use "a full range of tools" to ensure the implementation of President Donald Trump's vision regarding the Iraqi file and to prevent Maliki from running for the position of Prime Minister of Iraq.

As reported by Bloomberg News last Tuesday, Washington informed Iraqi officials in recent days that it might reduce Iraq’s access to oil export revenues if Nouri al-Maliki is appointed prime minister, given the United States’ view of him as being close to Iran, which has increased the pressure on the coordination framework, according to observers.

Iraq’s digital backbone: From transit corridor to data centre destination

Baghdad International Fair brings together over 1,000 firms to promote business in Iraq

Is the Dollar to Iraqi Dinar Really Fixed? Central Bank Explains

Central Bank Governor: The dollar exchange rate is fixed and will not change.

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The Governor of the Central Bank of Iraq, Ali Al-Alaq, attributed the fluctuation of the "parallel market" and the rise in the dollar exchange rate to the dealings of some traders, stressing that the dollar exchange rate at the Central Bank is fixed and will not change.

The video for this My FX Buddies Blog is Posted below here:

Al-Alaq said regarding the fluctuation against the dinar: “The price set by the Central Bank for the US dollar is fixed and does not change, but the developments that have occurred in the import mechanisms have prompted some traders to turn to the black market to buy dollars.”

Al-Alaq added: “These traders will soon return to the official channels to obtain currency, and thus the price will return to its normal level, especially since the Central Bank does not suffer from any problem with gold and foreign currency reserves, and continues to inject dollars, so we have not faced any obstacles in this regard.”

He also pointed out that the current turmoil in the currency market requires a reorganization of oversight of all commercial transactions to bring them back to their official channels, which will lead to stabilizing the situation and restoring balance.

The Central Bank Governor continued: “We do not have an official currency market (outside the Central Bank), there is only a black market, while the only source of dollars is the Central Bank. As for the dollars circulating in the markets, they are the surplus that is traded among citizens, because the Central Bank does not provide dollars for unofficial or illegal transactions. Rather, we monitor commercial activities and provide the necessary facilities to ensure that they proceed in accordance with legal frameworks, especially after the Central Bank developed its procedures in line with international standards.”

Al-Alaq added: “We are closely monitoring the activities of importers and exporters, goods, prices, and all related issues. At the same time, the transfers currently being conducted are legal and protected, and we hope that all traders will adhere to the procedures to ensure market stability.”

MP: Government agreement to raise the dollar exchange rate to 180,000 dinars

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MP Majid Al-Shankali stated that the Iraqi government has no real options to address the financial crisis other than raising the dollar exchange rate or reducing employee salaries, noting that there is an agreement among state leaders to adjust the exchange rate to reach about 180 dinars per dollar .

Al-Shankali said in a televised interview followed by Al-Sa’a Network that “raising the price of the dollar has become an almost inevitable option, and the state has only two solutions: either reducing salaries, which is something the government cannot do, or raising the value of the dollar against the dinar .”

He explained that "the number of employees and those who receive salaries or government grants amounts to about 7 million people, and with their families included, they represent more than 40% of the Iraqi population," noting that "any tampering with salaries will lead to a social shock affecting nearly half of Iraqi society ."

He explained that “Iraq has about 4 million government employees, in addition to retirees, social welfare beneficiaries, and the Martyrs Foundation, and the cost of salaries, compensations, and grants amounts to about 8 trillion dinars per month,” noting that “annual spending on these obligations exceeds 100 trillion dinars .”

He added that "the solution available to the government is to raise the exchange rate of the dollar against the dinar, which would allow for achieving financial balance and providing the necessary liquidity to pay salaries," considering that "the real price of the dollar, according to the financial assessment, should currently range between 160 and 170 dinars ."

He pointed out that "an agreement was reached between important leaders in the country to keep the exchange rate within a range of 160, 170, and perhaps 180 dinars per dollar ."

Al-Shankali criticized the "decision to restore the exchange rate to 1,300 dinars," stressing that "Iraq lost between 30 and 40 trillion dinars during the three years of Mohammed Shia Al-Sudani's government, which is equivalent to the expenses of salaries and compensations for five months ."

He added that “current oil revenues, even with prices close to $70 a barrel, do not cover annual expenses,” explaining that “total annual oil revenues are estimated at about $70 billion, which is equivalent to about 91 trillion dinars, and is less than the size of the state’s annual obligations .”

He pointed out that "non-oil revenues have not witnessed any real increase, at a time when Iraq is already suffering from a clear financial deficit, which makes raising the exchange rate a strong option in the next stage 

And not even an 30 minutes later ...

Important clarification from the Central Bank of Iraq regarding the dollar

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The Governor of the Central Bank of Iraq, Ali Al-Alaq, confirmed on Tuesday that the exchange rate of the dollar is stable and will not change, noting that the Central Bank does not suffer from any problem with gold and foreign currency reserves, and that they are continuing to inject dollars .

Al-Alaq said in a speech during the launch ceremony of the "E-Psule" electronic receipts project, which was followed by the "Al-Saa" network, that "the most important strategic axes in the path of economic and financial reform is the development of the electronic payment system and the transition towards the digital economy in a way that serves Iraq in general and the Kurdistan Region in particular," noting that "excessive reliance on cash is no longer consistent with the requirements of the modern economy ."

He added that "building a sophisticated financial system requires secure, fast and transparent electronic systems that contribute to enhancing confidence in the banking sector and supporting financial stability ."

He noted that “recent years have witnessed tangible developments in the electronic payment infrastructure through the expansion of the use of bank cards and electronic wallets, the increase in the number of points of sale in government institutions and commercial markets, as well as the launch of electronic money transfer systems that operate around the clock .”

He explained that “these steps have contributed to facilitating the daily transactions of citizens, reducing time and effort, and improving the efficiency of the financial system,” indicating that “the Central Bank of Iraq is playing a pivotal role in this context by leading the transformation through the development of regulatory frameworks and instructions that ensure the integrity of operations, protect users, support financial innovation, as well as encouraging financial technology companies, promoting financial inclusion, and bringing new segments of society into the banking system .”

Al-Alaq added that “the development of electronic payment in Iraq is not complete without coordination and integration with the efforts in the Kurdistan Region, where we are working with the relevant authorities in the region to unify the systems and technical standards and expand governmental and banking digital services,” noting that “dealing in financial integration is a fundamental pillar for sustainable development.” 

The Central Bank is preparing to launch a unified electronic payment system with the Kurdistan Region.

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The Governor of the Central Bank of Iraq, Ali Al-Alaq, affirmed on Tuesday that developing the electronic payment system and digital transformation has become an urgent necessity to strengthen the Iraqi economy, expressing the bank’s readiness to cooperate and coordinate with the Kurdistan Regional Government to establish a unified and secure electronic payment system that includes all governorates of the country.

Al-Alaq said in a speech during the launch of the regional government's electronic services project that "this system will serve Iraq in general and the region in particular," noting that "excessive reliance on cash is no longer compatible with the requirements of the modern economy."

He added that “building a sophisticated financial system requires secure, fast, reliable and transparent electronic systems that contribute to enhancing confidence in the banking sector and supporting financial stability,” noting that “recent years have witnessed tangible developments in the field of electronic payment through the expansion of the use of bank cards.”

Al-Alaq explained that “financial integration is the cornerstone for developing this sector, through the adoption of new tools that are added to electronic payment systems,” stressing that “digital transformation represents an important launch and a qualitative step in the path of modernizing the financial and banking sectors and promoting the culture of electronic payment in Iraq.”

He continued, saying: “We affirm our full support for all services that contribute to the development of financial services throughout Iraq, including the Kurdistan Region, in the belief that developing the electronic payment system is not an option, but a necessity to strengthen the national economy.”

The Central Bank Governor pointed out that "electronic payment is an ongoing process that requires a strong infrastructure, in addition to raising public awareness of the importance of these transformations," stressing "the continued coordination with the regional government to establish a unified and secure system that serves citizens and institutions alike."

Central Bank Governor: The shift to a digital economy is a "necessity," not an option.

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video here

https://www.youtube.com/watch?v=fYR_sYal9dw  in arabic

 

The Governor of the Central Bank of Iraq, Ali Al-Alaq, affirmed that developing the electronic payment system and the transition towards a digital economy represent one of the most important strategic axes in the comprehensive economic and financial reform process in Iraq, stressing that excessive reliance on cash transactions is no longer consistent with the requirements of the modern global economy.

In a speech delivered at the launch ceremony of e-Pusole, a new digital financial services tool in the Kurdistan Region, Al-Alaq noted that recent years have witnessed significant developments in the electronic payment infrastructure. He explained that this progress is evident in the expanded use of bank cards, the proliferation of e-wallets, and the increased number of point-of-sale (POS) terminals in government institutions and markets, along with the launch of 24/7 financial transfer systems, all of which have contributed to reducing time and effort and enhancing the efficiency of the national financial system.

Al-Alaq emphasized the pivotal role of the Central Bank in leading this transformation by establishing regulatory frameworks and guidelines that ensure the integrity of operations and protect users. He added, "The Central Bank seeks to support financial innovation and encourage fintech companies, with the aim of enhancing financial inclusion and bringing new segments of society into the formal banking system."

In the context of cooperation between Baghdad and Erbil, the Governor of the Central Bank emphasized that efforts to develop electronic payments in Iraq cannot be completed without close coordination and integration with the Kurdistan Region. He revealed ongoing work to unify systems and technical standards and expand digital banking services in the region, stressing that "financial integration is the cornerstone for achieving sustainable development."

Al-Alaq described the new project, which was launched today, as a practical model for integration between the public and private sectors, and a qualitative step to keep pace with global developments in the field of digital payments.

The Central Bank Governor concluded his remarks by expressing his gratitude to the Prime Minister of the Kurdistan Region, Masrour Barzani, praising his personal support for these technological advancements and his leadership in the region's digital transformation. Al-Alaq emphasized that this leadership support provides impetus for cooperation and coordination to ensure the implementation of a unified, secure, and transparent financial system that serves all citizens and strengthens confidence in the national financial system.

Masrour Barzani praises Al-Alaq's measures to improve the banking system in Iraq

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On Tuesday, the Prime Minister of the Kurdistan Region, Masrour Barzani, held an expanded meeting with the Governor of the Central Bank of Iraq, Ali Al-Alaq, and officials and representatives of a number of banks and digital wallet companies participating in the (My Account) and (E-Passula) projects.

During the meeting, emphasis was placed on the need to improve the banking system, develop mechanisms for joint work and coordination between the Kurdistan Regional Government, the Central Bank, the banks and digital wallets concerned, and participate in both projects.

The Prime Minister expressed his gratitude to the Governor of the Central Bank and his team for the facilities, great cooperation, and high coordination with the regional government, and for their support of the reform steps in the field of developing the banking sector, praising the reforms led by the Governor of the Central Bank with the aim of activating and improving the banking system throughout Iraq.

For his part, the Governor of the Central Bank of Iraq praised the vision of the Prime Minister of the Kurdistan Region in the field of banking reform and the digitization of public services provided to citizens, expressing his full readiness to provide all forms of support and coordination with the relevant authorities in the Kurdistan Regional Government.

Launch of the “Asia Pay” e-wallet service in Baghdad

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As part of the digital transformation, the electronic wallet service (Asia Pay) was launched today, Tuesday, in a number of Baghdad post offices.

A statement from the Ministry of Communications, followed by (Shafaqna Iraq), stated that “the Ministry of Communications, through the General Company for Post and Savings, launched the electronic wallet service “AsiaPay” at a number of postal locations in the capital.”

The service included the offices of (Baghdad, Al-Intisar, Aden, Al-Dubbat, Al-Jami’a, Palestine, Al-Mahmoudiya, Basmaya).

Ease and safety

“AsiaPay is a modern digital e-wallet that allows users to conduct various financial transactions easily and securely.”

He added that “the service is available to all Iraqi citizens after submitting the required documents, and non-Iraqis are required to submit a valid passport with an entry visa or a valid residence card.”

The wallet also offers a wide and diverse range of services, including free deposits without commission and withdrawals with a small commission, as well as the ability to pay government bills directly from the wallet.”

money transfer

He explained that “the service allows money transfers via MoneyGram to more than (200) countries around the world with reduced commissions, in addition to local transfers within Iraq from one wallet to another within “Asia Pay” without any commission, in addition to services for topping up phone and internet credit and purchasing various electronic cards, whether through the application or through authorized agents.”

Stagnant banks... where funding melts away and growth disappears

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Stagnant banks in Iraq reflect a difficult economic reality, where financing is diverted to short-term operations and is not directed towards projects that build the country's future.

Despite the doubling of the number of private banks in Iraq during the past years, their role in financing investment and economic development remains limited, in light of deep structural and regulatory challenges related to the nature of their activity, weak confidence in them, the dominance of government banks, in addition to a legal environment that is not conducive to long-term credit.

The private banking sector, which includes about 60 banks, faces a number of structural challenges that limit its ability to finance major investment projects and long-term productive projects.

Economist Diaa Al-Mohsen explains that private banks mostly rely on the currency sale window or operations related to foreign transfers as a primary source of profit.

He points out that this type of easy and guaranteed profit reduces the incentive for banks to engage in long-term credit risk, as the high liquidity is invested in currency trading rather than investment lending.

Al-Muhsin adds that private banks suffer from a mismatch in maturity profiles because most of their deposits are current account deposits, not long-term savings deposits. Consequently, these banks are hesitant to extend medium- or long-term credit with funds that depositors might demand at any time, thus limiting their contribution to financing major investment projects.

Borrower quality

According to Al-Muhsin, the problem isn't limited to the banks' willingness to lend, but extends to the quality of the borrowers. Procedures for recovering non-performing loans and liquidating mortgages are slow and complex, while most small and medium-sized enterprises lack accurate financial records, making creditworthiness assessment a high-risk process.

With the weak production base of the Iraqi economy in the industrial and agricultural sectors, the demand for credit is concentrated in the consumer trade sector, which is short-term credit that does not create sustainable added value to the gross domestic product.

Al-Muhsin points out that the major government banks hold the largest share of deposits, particularly state employee salaries, leaving private banks with a limited market share of liquidity capable of creating broad credit.

He emphasizes that the relationship between the dominance of government banks and the weakness of private banks is not a linear cause-and-effect relationship, but rather a vicious cycle in which the factors feed off each other. Government dominance creates an unfair competitive environment through the legal monopoly of public deposits, sovereign guarantees, and operational privileges, and at the same time is a result of historical and structural failures in the private banking sector, including persistent defaults, weak transparency and services, and limited reach.

Al-Muhsin explains that the bank, as a profit-making institution, seeks to maximize its profits with the least possible risk, so if the regulatory rules make credit inactivity a profitable option, it will go for it.

In this context, he believes that the central bank’s monetary tools, such as certificates of deposit, the currency window, regulatory tightening and prudential standards, aim to curb inflation and stabilize the currency, but may at the same time stifle productive credit.

Just a deposit box

In an economy that is highly cash-based, the bank transforms from an institution for creating credit into merely a deposit box or outlet for disbursement.

The money multiplier depends entirely on money remaining within the banking system, while money circulating outside the banking system is considered a “lost opportunity” to finance development.

Due to weak financial inclusion, local banks face difficulty in attracting savings and long-term deposits, forcing them to rely on deposits from large depositors or borrow from other institutions at high interest rates, which raises the cost of lending, deters productive borrowers, and attracts speculators or high-risk borrowers.

Al-Muhsin also points out that banks avoid risks because of the difficulty of verifying the sources of funds in an environment dominated by cash transactions, for fear of falling under suspicion of money laundering or being exposed to international and regulatory sanctions.

This policy leads to restrictions on credit operations, particularly those related to foreign trade or projects that lack a clear and bank-documented documentation cycle, making cash the “number one enemy” of credit expansion.

He affirms that the currency sale window played a dual role: it was a tool to control inflation and stabilize the exchange rate, but at the same time it created a structural distortion in the function of private banks, distancing them from their credit and development role, as a result of profit-driven ease and the atrophy of the credit mindset within banks, and the lack of need to attract development deposits.

Commercial banking

This shift towards commercial banking instead of investment financing has led to the transformation of most private banks into something resembling large banking companies.

Al-Muhsin adds that the erosion of confidence in the developmental role of private banks has reduced the willingness of real project owners to seek financing from them, preferring to resort to government banks despite their bureaucracy, or to rely on self-financing, which has kept the private sector away from banking financial leverage.

In light of recent reports, there is a trend to restructure the banking role, both governmental and private, with the aim of activating credit inclusion tools, linking investments to productive projects with a real impact on the trade balance, in addition to moving towards international governance and transparency standards, which pushes banks to move away from dependence on the currency window towards real credit.

Al-Muhsin emphasizes that the legal environment and governance structure form the backbone of any sustainable credit activity.

In the case of private banks, the challenge is not limited to the availability of liquidity, but also includes the ability to manage legal risks and ensure the recovery of funds, areas that suffer from deep gaps due to the fragility of the guarantee system, the slowness of the commercial judiciary, the difficulty of liquidating real estate, and the absence of a modern insolvency and bankruptcy law.

Supporting the national economy

For his part, economic researcher Abdullah Najm believes that most private banks do not play a real role in supporting the national economy, as they are content with short-term operations and quick returns, far from investing in the production and reconstruction sectors.

Najm points out that the reliance of these banks on government funds and employee salaries makes their working environment limited, explaining that many private banks granted more credit than government banks during 2025, but they remained unable to translate this activity into a tangible economic impact.

He adds that some banks were established primarily to participate in the currency auction window, which weakened customer confidence in their banking role, and most of them focused on quick profits instead of supporting the national economy.

Najm argues that the association of some private banks with political and religious parties and orientations sometimes makes their decisions subject to political interests more than economic considerations, which weakens governance, undermines customer confidence, and limits the banks’ ability to perform their role as a fundamental pillar of economic activity.

Najm concludes by emphasizing that the banking sector needs radical reforms in the legal environment and financial governance, building customer trust, and distancing banking decisions from political interests, in order to be able to engage in long-term investments and effectively contribute to economic growth; otherwise, it will remain merely a short-term financial tool.

Another version

Most private banks in Iraq have turned into tools for quick profits, far removed from any real developmental role, amid accusations of prioritizing political interests over economic considerations, which raises broad questions about the future of the private banking sector, according to Al-Mada newspaper .

The newspaper, in a report seen by Al-Sa’a Network, quoted its sources as saying that “most private banks do not play a real role in supporting the national economy, as they are content with short-term operations and quick returns, far from investing in the production and reconstruction sectors .”

She added that "the reliance of these banks on government funds and employee salaries makes their working environment limited," explaining that "many private banks granted more credit than government banks did during 2025, but they remained unable to translate this activity into a tangible economic impact ."

She pointed out that “the association of some private banks with political and religious parties and orientations sometimes makes their decisions subject to political interests more than economic considerations, which weakens governance, undermines customer confidence, and limits the ability of banks to perform their role as a fundamental pillar of economic activity .”

She explained that "the banking sector needs radical reforms in the legal environment and financial governance, building customer confidence, and distancing banking decisions from political interests, in order to be able to engage in long-term investments and contribute effectively to economic growth, otherwise it will remain merely a short-term financial tool ."

She explained that “local banks suffer from a problem of mismatched maturities, because most of their deposits are current deposits on demand and not long-term savings deposits, which leads them to avoid granting medium or long-term credit from funds that depositors may demand at any time, which limits their contribution to financing major investment projects .”

She emphasized that “the relationship between the dominance of government banks and the weakness of private banks is not a linear cause-and-effect relationship, but rather a vicious cycle in which the factors feed off each other, as government dominance creates an unfair competitive environment through the legal monopoly of public deposits, sovereign guarantees and operational privileges, and at the same time is a result of historical and structural failures in the private banking sector, including continuous defaults, weak transparency and services, and limited reach .”

The report noted that "local banks mostly rely on the currency sale window or operations related to foreign transfers as a major source of profit ."

He added that "this type of easy and guaranteed profit reduces the incentive for banks to engage in long-term credit risks, as high liquidity is invested in currency trading instead of investment lending 

Article 140 Committee: Thousands of transactions returned to Kurds and newcomers in Kirkuk

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Babakir Sadiq, the official in charge of the office of the committee implementing Article (140) related to normalizing the situation in the disputed areas of Kirkuk Governorate, revealed on Tuesday that thousands of transactions of Kurdish and expatriate visitors have been returned, calling for the adoption of a new mechanism to update data through a "barcode" system for each transaction.

Sadiq told Shafaq News Agency that "the High Committee has returned the transactions of Kurdish applicants, which number about 10,000 transactions submitted more than 15 years ago, in addition to about 5,000 transactions related to immigrant families," noting "the need to adopt a modern mechanism to organize these files and update their data."

He added that "the committee was surprised by the decision of the High Committee office in Baghdad to reduce Kirkuk's budget and transfer it to compensation for the central and southern governorates, without compensating the displaced and newcomers in the governorate."

Sadiq explained that "the number of affected families is large, with about 40,000 families displaced from Kirkuk, in addition to about 12,000 new arrivals," noting that "since its formation, the committee has been able to address a number of these cases, as the Higher Committee has returned about 2,300 cases for displaced persons and 1,700 cases for new arrivals."

He pointed out that "the Financial Control Bureau demanded the adoption of a barcode system for transactions that were delivered to applicants during the years from 2010 to 2015," questioning "the reasons for returning these transactions after 15 years, at a time when a number of their owners have passed away."

Sadiq explained that “the Article (140) Committee has begun, starting today, to promote barcode addition transactions, in coordination with the Department of Nationality and Civil Status, which is responsible for granting a special barcode to each family for the purpose of updating data and organizing transactions.”

Sadiq called on the federal government to "do justice to Kirkuk within the compensation file," stressing that the government of the (outgoing) Prime Minister, Muhammad Shia al-Sudani, did not do justice to the province with any decision, but rather contributed - as he put it - to keeping the old problems without solutions, foremost among them the file of Article (140).

He stressed that "the next government is required to do justice to Kirkuk in terms of financial allocations, explaining that the value of compensation for displaced persons amounts to 10 million dinars, while compensation for newcomers amounts to about 20 million dinars.

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Five years of waiting... Thousands of angry students take to the streets of Baghdad to demand employment.

 

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The capital, Baghdad, witnessed on Tuesday (February 10, 2026) massive demonstrations by students who have been waiting for appointments for five years, according to what one of the demonstrators told a reporter from "Baghdad Today".

Our correspondent explained that "the numbers are very large, close to a thousand demonstrators, as they gathered in the Alawi area and then headed towards Al-Salihiya, with the main streets closed during their march."

He added that "the protesters have now reached the front of the Iranian embassy and are on their way to the House of Representatives to demand their right to be appointed, as they say."

"To win Trump's favor"... Iraq wants to strengthen its partnership with two American oil giants

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Bloomberg reported on Tuesday that Iraq wants to strengthen its partnership with US oil companies ExxonMobil and Chevron in an effort to "win over" US President Donald Trump in order to shield the country from tensions between Washington and Tehran, and the possibility of a future conflict in the region.

The agency stated in its report that the two companies have their sights set on expanding production in OPEC member countries, including some of the world's most dangerous geopolitical hotspots, as President Donald Trump's assertive foreign policy helps them strike deals.

She added that Venezuela, which has the world's largest oil reserves, is the most prominent of these new opportunities. It is a country that was largely off-limits to American investors until Trump arrested the country's former president, Nicolas Maduro, and seized control of the country's crude oil exports.

But the United States is also supporting Exxon and Chevron in their negotiations in Iraq, Libya, Algeria, Azerbaijan, and Kazakhstan, according to public disclosures and people familiar with the matter who asked not to be identified because the talks are confidential, the report said.

ExxonMobil signed an agreement in October to study the giant Majnoon field in Iraq, while Chevron had signed a similar agreement several months earlier for the Nasiriyah project in southern Iraq.

The two companies expressed interest in taking over the West Qurna 2 field, which produces about 10% of Iraq’s oil, before the current operator, Lukoil PJSC, agreed to sell most of its international assets to the Carlyle Group.

Bloomberg noted in its report that some members of the political elite in Iraq believe that investments coming from American oil giants demonstrate the country's independence from Iran, and they believe that these investments will help win Trump's favor, given the deteriorating relations between Washington and Tehran.

The report quoted those Iraqi officials as saying that they were "fed up with the slow pace of development by Russian and Chinese companies" and believed that the presence of Exxon or Chevron could also help protect the country from any potential future conflict between Iran, Israel and the United States, according to people familiar with their thinking who asked not to be identified because of the sensitivity of the information.

Significant progress is unlikely until Iraq forms its new government, a process that has been delayed since the November 2015 elections due to negotiations between political rivals over power-sharing arrangements.

Officials in the outgoing administration in Iraq did not hide their desire to partner with Exxon and Chevron, according to Bloomberg.

Bitter melon: Financial inclusion in the Kurdistan Region has jumped to 50 percent

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https://www.youtube.com/watch?v=uFfO2yEWuNI    in Arabic

Head of the Association of Private Banks: “E-Basoula” is a step towards simplifying services for citizens

 

The head of the Association of Iraqi Private Banks, Wadih Al-Hanzal, praised the great success achieved by the conference launching the "e-Psûle" project in Erbil, stressing that this digital service will represent a qualitative leap in facilitating payment mechanisms for citizens and developing the financial system in the region.

In a special statement to Kurdistan24, on the sidelines of the conference held under the auspices of Kurdistan Regional Government Prime Minister Masrour Barzani, and in the presence of the Governor of the Central Bank of Iraq, Ali Al-Alaq, Al-Hanzal revealed a tremendous development in the rates of digital participation of citizens.

Al-Hanzal said: “I remember three years ago, during a conference held at the Rotana Hotel in Erbil, the percentage of citizens participating in digital systems did not exceed 5%. Today, after only three years, we are talking about this percentage reaching 50%, which reflects the spread of a very high digital financial culture thanks to the continuous governmental and banking initiatives.”

Regarding the housing issue, Al-Hanzal called for enhanced cooperation between Baghdad and Erbil to facilitate access to loans for citizens of the Kurdistan Region. He explained that loans allocated for housing units are issued by the Real Estate Bank in Baghdad with support from the Central Bank of Iraq.

The head of the association proposed signing a "memorandum of understanding" between the financial side of the regional government and the Real Estate Bank in Baghdad, to activate and facilitate access to these banking products and real estate loans for the citizens of the Kurdistan Region, in order to achieve tangible positive results on the ground.

Regarding concerns about the exchange rate, Al-Hanzal reassured the Iraqi public, stressing that the Central Bank of Iraq today possesses "very distinguished" cash reserves exceeding the $100 billion mark, in addition to a high gold reserve.

He concluded his statement by saying: "The Iraqi dinar is safe and there is no fear for it; despite some minor fluctuations that may occur occasionally, it always returns to a state of stability thanks to the strong financial cover available at the Central Bank."

British report: Iraq is one of the most important digital infrastructure markets in the Middle East

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Prime Minister Mohammed Shia Al-Sudani chaired the sixth regular session of the Council of Ministers for the year 2026 on Tuesday, during which the general situation in the country was discussed, and the topics on the agenda were reviewed and the necessary decisions were made regarding them.

The Prime Minister’s Media Office stated in a statement received by “Iraq Observer” that “the Council followed up on the discussion of the package of decisions and steps previously approved by the Ministerial Council for the Economy, in order to maximize revenues and reduce expenditures, and to strengthen the national economy in various fields. It also followed up on the procedures of the ministries in this regard, in order to ensure stability in local markets and the goods and services provided to all citizens.”

In the area of maximizing imports and diversifying exports, the Cabinet approved the “recommendation of the Ministerial Council for the Economy regarding the amount of support for petroleum products, which included the following:

Firstly, the Ministry of Oil will export no less than 75% of the black oil from local refining, which will reach 1.1 million barrels per day during this year, and export white oil derivatives according to the available surplus.

Secondly/The Ministries of Electricity and Oil are obligated to install calibration measurement meters on the feed outlets of the generating units, and to match the quantities received with the electricity production.

Thirdly, the Ministry of Electricity should convert the power plants that operate on crude oil to operate on petroleum derivatives that are more efficient.

Fourthly/Supplying ship fuel plants with fuel oil at a price 20% lower than its price in the global bulletin, and cement plants at a price 60% lower than the price in the global bulletin, and supplying fuel oil at a price 60% lower than the price in the bulletin, and unifying the price of naphtha supplied to hydrogenation plants to be 40% lower than its price in the global bulletin.

Fifth: Suspending the granting of approvals for the establishment of factories that rely on petroleum derivatives as raw materials for a period of 5 years, and the security services taking firm measures to prevent the smuggling of petroleum derivatives and materials.

Regarding infrastructure projects, the Council continued, “The implementation of the Greater Basra Water Project, in its third and fourth phases related to changing the quality of raw water, and approved the recommendation of the Ministerial Council for Economy regarding the inclusion of the Ministries of Planning, and Construction, Housing and Municipalities in the project and coordination between them regarding it for the year 2026.”

In the field of digital transformation, the Cabinet approved “authorizing the General Authority for Taxes/Ministry of Finance to contract with the General Company for Communications and Informatics/Ministry of Communications to connect it to the Internet service for the Authority and its branches (51 branches), and authorizing the General Authority for Taxes to negotiate with the other party and make changes to the technical and commercial offer, and add clauses as needed.”

The Cabinet approved “the settlement of debts between the General Company for Grain Trade/Ministry of Trade, and the General Company for Iraqi Ports/Ministry of Transport, according to the recommendations of the committee of Diwani Order 43 of 2025, and the observations and proposals included in the minutes of the committee, as well as the observations of the General Secretariat of the Council of Ministers.”

The Cabinet approved obligating the Ministries of Education and Higher Education and Scientific Research to implement Article 10/Third of the University Service Law, without any financial impact, and this includes all entities that apply the aforementioned service law.

Iraq and Sweden discuss reactivating cooperation and holding joint economic forums.

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he Undersecretary of the Ministry of Foreign Affairs for Bilateral Relations, Ambassador Mohammed Hussein Bahr Al-Uloom, discussed on Tuesday with the Chargé d'Affaires of the Swedish Embassy in Iraq, Jörgen Lindström, ways to enhance joint cooperation between the two countries.

A statement from the Ministry, received by “Dijlah News”, stated that during the meeting, bilateral cooperation relations between Iraq and the Kingdom of Sweden were reviewed, and prospects for developing them in a way that achieves common interests, in addition to discussing a number of political and economic issues of mutual interest.

For his part, Lindström affirmed his government's commitment to resuming the Swedish embassy's operations from Baghdad in the near future. He also indicated the Swedish government's intention to organize a business forum in Sweden after Ramadan, with a similar forum to be held in Iraq next summer, with the aim of strengthening economic cooperation and encouraging mutual investments between the two countries.

US Congressman Joe Wilson told Rudaw regarding the Kurdish experience in Iraq: It should be a model for the region.

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Congressman Joe Wilson believes that the Kurdistan Region's experience should serve as a model throughout the region.

 

Joe Wilson told Rudaw's Washington bureau chief, Diyar Kurda, on Tuesday (February 10, 2026), "My work history goes back nearly 20 years, especially with the Kurdish community in Iraq."

 

He added: "I saw how stability and prosperity can be achieved. For me, this should be a model throughout the region for what can be accomplished."

 

Regarding the situation in Syria, Joe Wilson explained that "the American people want a united, successful, stable, peaceful and prosperous Syria," expressing his support for US President Donald Trump's approach of "giving Syria a chance."

 

Below is the text of Rudaw's question and the answer from US Congressman Joe Wilson:

 

Rudaw: Mr. Deputy, tell me what you concluded from this session? And how do you see the situation on the ground after listening to the testimonies of the people who gave their statements?

 

Joe Wilson: I am truly grateful to President Mays for organizing this session, because the American people want a united, successful, stable, peaceful and prosperous Syria, and that was the purpose of holding this session.

 

We recognize the challenges, and I personally, once again, strongly support President Donald Trump’s approach of giving Syria a chance. So those challenges must be addressed, and I actually feel that President al-Sharaa is making the right efforts. We know the diversity of the components that exist in Syria, and I think he also understands how important it is to work together to show respect for these various components.

 

My work spans nearly 20 years, particularly with the Kurdish community in Iraq. I have witnessed firsthand how stability and prosperity can be achieved. For me, this should serve as a model for the entire region, demonstrating what can be accomplished.

Following the US withdrawal, the Air Force is transferring "attack drones" to Ain al-Asad Air Base - Urgent

 

 

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The American military affairs network, Jane's, revealed on Tuesday (February 10, 2026) that the Iraqi Air Force had transferred a number of drones, which it described as "attack" aircraft, to Ain al-Asad Air Base in the west of the country, following the withdrawal of American forces from the base.

The network stated, according to its report and translated by “Baghdad Today”, that Iraq transferred long-range attack drones of the “CH5” type, equipped with surveillance and attack equipment, to Ain al-Asad base, along with other drones of the “Hawwam” type, indicating that these drones were stored in hangars that were previously used by American aircraft inside the base.

The network indicated that the transfer of long-range attack drones to Ain al-Assad base comes in conjunction with the continued transfer of ISIS terrorist prisoners from outside the country to the Iraqi interior, as well as the escalation of security tension in the region, especially against the backdrop of US-Iranian disputes, in addition to another escalation in the tone issued by Turkey towards Iraq during the recent period.

The transfer of the drones to Ain al-Asad Air Base comes weeks after the completion of the US troop withdrawal plan from the base, as part of the Iraqi-American agreement to reorganize the coalition forces' presence and transform combat missions into purely advisory and training roles. Over the past few months, the base has witnessed a gradual reduction in the number of US troops and equipment before being fully handed over to Iraqi forces, within a broader framework aimed at ending the direct foreign military presence within combat bases, while maintaining security and intelligence coordination in the face of the ISIS threat.

long read but good  hahaha imo  interview of Ali Alaq

Ali Al-Alaq told Rudaw: There will be no change in the exchange rate, and the government is proceeding with the implementation of the ASYCUDA system and customs tariffs.

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The Governor of the Central Bank of Iraq, Ali Al-Alaq, confirmed that there is no intention to change the exchange rate of the dinar against the dollar, noting that the government is proceeding with the implementation of the ASYCUDA system and the customs tariff as part of steps to regulate trade and imports.

 

This came during his hosting in Erbil by Rudaw Media Network with presenter Mohammed Sheikh Fateh.

 

The episode covered several topics, most notably the exchange rate policy, the money supply inside and outside the banking system, liquidity levels in Iraq, the budget deficit, delays in salary financing, in addition to the ASYCUDA system and customs tariff and their impact on the dollar market, as well as the size of foreign reserves and gold at the Central Bank.

Below is the text of the interview:

Rudaw: Is there any current intention to change the exchange rate of the dollar against the dinar or not?

Ali Al-Alaq: We hear a lot of talk and speculation, and there is a great deal of confusion, especially during periods of market volatility or general unrest surrounding the issue of changing the exchange rate. We have emphasized, and we reiterate, that the Central Bank does not consider changing the exchange rate; this is its exclusive domain, as you know. Scientifically, economically, and monetaryly speaking, the exchange rate in Iraq should only change if the Central Bank of Iraq identifies a problem in meeting the demand for foreign currency, such as a shortage of foreign reserves or specific monetary policy requirements. This is not the case at present. The Central Bank has no problem with its reserves, which are at a very comfortable level. Therefore, any discussion about changing the exchange rate—some linking it to the budget deficit—is incorrect. A budget deficit has its own fiscal solutions related to fiscal policy, while changing the exchange rate is linked to the Central Bank's calculations and monetary policy. Whenever the Central Bank finds it difficult to maintain the exchange rate or meet the demand for foreign currency, the decision should be made based on the Central Bank's own circumstances and challenges, not on the budget deficit. Linking the exchange rate to the budget deficit sets a precarious precedent for the future of Iraq's national currency. It implies that any deficit will inevitably lead to exchange rate fluctuations, a highly dangerous scenario. Maintaining the purchasing power of our currency is crucial, and stability is a fundamental prerequisite for economic activity and investment in the country.

 

Rudaw: If the price of oil drops and stabilizes at $55 per barrel, will you resort to readjusting the exchange rate again or not?

Ali Al-Alaq: As I emphasized, firstly, regarding the price of oil, if it's at $50 or $60, we consider that a normal price, not a low one. When we look at the historical time series of oil prices, we can say that it's currently at a high level. Therefore, this price isn't actually low, but rather a reasonable and expected price. That's why I reiterate the principle that the central bank only reconsiders the exchange rate if it reaches a critical point in terms of its foreign currency and gold reserves, and is unable to meet the demand for foreign currency. This should be the rule, and our reserves are at a level that won't decrease in a way that threatens the exchange rate in the foreseeable future, at least, even with the current oil price levels or those we might expect to decrease in the coming period. We've experienced similar situations before, with oil prices reaching $20 and even lower in previous years, including in 2016-2017. Despite that, our reserves were less than half of what we have today, and yet we didn't change the exchange rate at that time.

 

Rudaw: Can you talk about the size of the money supply printed in Iraq in general? And what is the size of the money supply outside the banking system and inside the banking system?

Ali Al-Alaq: The money supply, meaning the currency in circulation, amounts to approximately 100 trillion Iraqi dinars. Frankly, this supply was growing at a high rate in previous years. Therefore, over the past two years, we have managed to control the growth of the money supply in a way that avoids creating pressure on prices and maintains the inflation rate. Certainly, the essence of monetary policy is monitoring, controlling, and managing the money supply, and we have succeeded in this, as we observe that the money supply has been completely under control over the past two years. Unfortunately, more than 80% of this supply is outside the banking system, a phenomenon we are all aware of, and it has several contributing factors.

 

Rudaw: For example? What reasons?

Ali Al-Alaq: Of course, when we talk about a large amount of cash circulating outside the banking system, it's not in the pockets or safes of employees or those with limited incomes, but rather it's certainly held by the business class in its various forms. This is fundamentally linked to tax evasion and the failure to disclose revenue, profits, and income levels, especially in the trade sector, which represents the largest economic activity in Iraq. This, contrary to what some interpret, is the core or primary reason. Of course, other factors come into play, such as confidence in the banking sector, but this is also mitigated because we now have deposit guarantees, and there are well-known, very strong banks and secure government banks, and so on. However, there are numerous social factors. Some people don't deal with banks for religious reasons, for example, or due to a lack of financial literacy.

Rudaw: Is this a dilemma or a problem?

Ali Al-Alaq: No, it is a problem that can be solved.

 

Rudaw: Can it be resolved?

Ali Al-Alaq: This means that if investors are reassured by a fair and transparent tax system, they will bring their money and deposit it in banks. But in reality, we need to reconsider the tax system, the methods of assessment and calculation, and the structure of income tax. It must be designed in a way that inspires confidence and attracts the funds held by business owners.

 

Rudaw: Is there any plan to absorb the money supply outside the banking system? For example, by raising the interest rate or by issuing treasury bonds? What is the best solution to absorb this money supply?

Ali Al-Alaq: It's a set of solutions. For example, banks call these goals impossible to achieve simultaneously. Banks can attract a certain percentage of these deposits by raising interest rates, but this increase will be high enough to entice citizens to deposit their money, because the opportunities currently available in Iraq—job and investment opportunities—are more lucrative than the deposits currently held in banks. As you know, if you invest in real estate, you expect to receive a higher return than if you put your money in a bank and wait a year or two for a small interest rate. To be motivated to deposit money in banks, you need to be assured of a high return. This means the bank must offer high profits or interest. The problem here is that banks might be able to attract these deposits by offering high interest rates, but in this case, lending rates will also become high, because the bank operates on the principle that it makes a profit or return based on the difference between the interest it gives and the interest it receives. If we assume he gives you 10% interest on your deposit, he must lend at least 12% to earn 2%. These are not simple equations, especially since, generally speaking, due to various factors, we don't want interest rates to rise too much.

Rudaw: What is the current interest rate set by the Central Bank?

Ali Al-Alaq: The interest rate on the signal at the Central Bank is 5.5%.

 

Rudaw: And 5.5% is the lowest interest rate?

Ali Al-Alaq: Banks have the freedom to set interest rates, as the central bank does not interfere in setting interest rates and leaves the matter to competition.

 

Rudaw: But the central bank's interest rate is 5.5%?

Ali Al-Alaq: We do not lend, but we provide a reference rate. The loans that are at the lowest interest rate or almost interest-free are those provided by the Central Bank to the Real Estate Bank and the Housing Bank to finance real estate loans of various types.

 

Rudaw: Is there any real problem with the lack of cash liquidity in Iraq, given the reports that speak of it?

Ali Al-Alaq: There's a misunderstanding here. Some people portray the issue as being related to available cash, which isn't the case. There's also confusion regarding the roles of the Central Bank and the Ministry of Finance. The Ministry of Finance's operations are primarily based on oil revenues. Exported oil is deposited in dollars into our foreign accounts, and the Ministry of Finance receives the equivalent in dinars from the Central Bank. In simple terms, we are the ones who facilitate the exchange. For every dollar received by the Ministry of Finance from oil revenues, we provide the equivalent in dinars. Therefore, it's quite strange to hear people say that the Federal Reserve isn't providing Iraq with funds, which is why salaries aren't being paid. This is indeed very odd, because for every dollar deposited into the Ministry of Finance's account, we provide the equivalent in dinars. The Ministry of Finance doesn't spend in dollars; it spends in dinars, and the dinars originate from the Central Bank, not the Federal Reserve. To avoid delays, the Ministry of Finance operates daily. Every day, a sum is deposited into the dollar account, and the Central Bank immediately provides the Ministry of Finance with the equivalent in dinars. So, if there's a shortage, it means that revenues aren't sufficient to cover expenses, not that there's a lack of liquidity. In reality, what has happened and continues to happen is that the budget deficit exceeds the capacity to cover it. When the state's revenues over the past three years have been approximately $80 billion from oil, and the deficit is 70 trillion dinars, this is an abnormal level of deficit. The equation cannot remain this way without the ability to increase domestic revenues. In this situation, to achieve balance, we must either increase our domestic revenues, reduce expenditures, or do both simultaneously. Domestic revenues remain at a very low level, and therefore oil revenues are insufficient to cover expenditures. The budget is designed with expenditures that exceed the revenues' ability to cover them, and this is the crux of the problem. This is what some international financial institutions have termed "fiscal recklessness"—planning expenditures that significantly exceed your revenues.

 

Rudaw: There is a problem in the Kurdistan Region every month, which is the delay in funding employee salaries. The Federal Ministry of Finance and the Parliamentary Finance Committee say that this is due to a problem with cash liquidity. Is that true?

Ali Al-Alaq: Indeed, there is a deficit, but this deficit, as I explained, is due to the size of expenditures compared to revenues. Therefore, even if we want to solve the core of the problem and escape the deficit trap we've fallen into, we must restructure the country's economic and financial situation. In other words, is this deficit and the inability to cover expenditures an unmanageable situation? We believe this can be addressed by diversifying the economy and increasing the efficiency of collecting local revenues. For example, we spend between 23 and 25 trillion dinars annually on the electricity sector, covering fuel, imports, maintenance, operating costs, and all related aspects. Revenues from citizens amount to approximately one trillion dinars. Addressing this sector could eliminate the entire deficit. For instance, the Ministry of Oil provides 13 trillion dinars annually in subsidies to the private sector, citizens, and the electricity sector. This means that annual fuel subsidies alone amount to 13 trillion dinars, while annual electricity expenditures exceed 23 to 25 trillion dinars. Customs duties should be no less than 8 to 10 trillion dinars, calculated based on trade, imports, and the specific nature of the goods. We have loss-making public sector companies that cost the state 3 trillion dinars annually to cover their salary deficits.

 

Rudaw: Which companies, for example?

Ali Al-Alaq: These companies, mostly in industry and agriculture, have been idle since 2003 or 2004, and the government is still funding their salaries. We can calculate that over the past 20 years, 2 to 3 trillion dinars have been paid annually without any return from these companies. Therefore, we believe that while there is indeed a deficit, Iraq's natural and human resources, along with its mineral wealth, investments, and other assets, are capable of creating a strong economy and achieving financial sustainability. This deficit can be addressed if we restructure our operations.

 

Rudaw: But treating it isn't easy?

Ali Al-Alaq: No solution can be achieved with the stroke of a pen; action must be taken. However, many solutions have been delayed for too long, and there are obstacles that must be understood and overcome at the national level. Two obstacles hinder reform: corruption and populism. Certainly, without addressing these two phenomena, reform will be difficult, especially when populism and corruption are intertwined and interconnected. Nevertheless, it is possible, provided it is viewed through an economic lens, prioritizing national interest and aiming to stabilize the overall financial situation in Iraq. There are significant opportunities for reform without placing undue pressure or harm on ordinary citizens.

Rudaw: There is a problem regarding the trading of dollars in the parallel markets, which is the old and new editions. Do you have any plan to address this?

Ali Al-Alaq: We have been informed of this, and it is one of the strange phenomena in the country, that there is an old edition and a new edition, each with its own price. Of course, this is completely untrue, and we at the Central Bank deal with all editions. Some time ago, we issued a circular warning banks, dealers, and exchange companies against discriminating between the two editions.

 

Rudaw: After activating the ASYCUDA system and renewing customs duties on imported goods and services, have you noticed an increase or decrease in traders' demand for dollars through the electronic platform?

Ali Al-Alaq: Yes, and this is actually because some traders, due to these measures, have taken a break. Some expect that there might be a change in the system or a return to the previous customs duties, so there is a sense of anticipation among some. But I think the government's message was clear that it is proceeding with this implementation, and it may review some cases if there are genuine reasons or factors to consider. But in general, the government is proceeding with the implementation of the tariff, the ASYCUDA system, and the advance customs declaration, and this truly serves significant interests for the country, and not just financial ones.

 

Rudaw: What have you noticed, an increase or a decrease in demand for the dollar?

Ali Al-Alaq: There is a decrease in demand for external transfers through transfer channels.

 

Rudaw: Temporarily?

Ali Al-Alaq: Of course, and some merchants who haven't yet joined this new system have tried to meet their dollar needs from the market, thus putting pressure on it. But this is an abnormal situation. Consequently, these merchants cannot continue buying from the market because the goods will become expensive for them, and the practice won't work because the merchant is required to bring the goods into the system, and this system will detect whether or not there has been an external transfer. The process could be considered money laundering. As a result, we experienced this firsthand when we moved the transfer operations to the electronic platform for the first time in 2023; it took a long time for merchants to get used to it.

 

Rudaw: Have you set a time limit for the Kurdistan Regional Government's commitment to the ASYCUDA system or not?

Ali Al-Alaq: This issue is being discussed between the region and the federal government. We are not a party to the customs permits or the ASYCUDA system, but we believe it is important and are following it closely, given its implications for the exchange rate and foreign currency transfers, as you mentioned. Therefore, we discussed this matter today with the Prime Minister of the region, Masrour Barzani, and there is ongoing communication between the government in Baghdad and the regional government to reach an agreement. It seems there are some technical issues related to linking the system and other matters, which should not pose significant obstacles to its implementation. We hope to find a solution so that the market can stabilize.

 

Rudaw: What is the size of the foreign currency reserves held by the Central Bank of Iraq? And what is the percentage of gold?

Ali Al-Alaq: We don't measure foreign reserves as a single number, but rather as a formula. A single number might be $50 billion, which is considered large because we measure it against the issued currency. If the issued currency is $300 trillion, then $50 billion won't cover it. Sometimes, you might have a small amount, but the issued currency is also small, so it's sufficient. The standard is for foreign reserves to cover the issued currency, foreign trade, and external debt in a complex formula. And we are currently, in fact, in an excellent position within this internationally followed complex formula.

 

Rudaw: Does this mean the size of foreign reserves is more than $100 billion?

Ali Al-Alaq: Yes, more than 100 billion dollars.

 

Rudaw: And what is the percentage of gold in these reserves?

Ali Al-Alaq: heT  gold now amounts to 76 tons or more