May salaries will be paid, and June salaries will be paid in the coming days. The Council of Ministers approves the memorandum of understanding with Kurdistan.
The Iraqi Council of Ministers approved the memorandum of understanding signed between Erbil and Baghdad regarding the salaries of employees in the Kurdistan Region.
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Al-Jabal's correspondent in Baghdad reported on Thursday that the Iraqi Council of Ministers approved the memorandum of understanding signed with the Kurdistan Regional Government regarding employee salaries, directing the release of employee salaries for one month.
The Iraqi Council of Ministers held an extraordinary session, chaired by Council Speaker Mohammed Shia al-Sudani, to discuss the agreement with Kurdistan on salaries.
According to information obtained by this correspondent, approval has been given to disburse salaries to Kurdistan Region employees for May as an initial phase, with June salaries to be disbursed in the coming days.
He said the extraordinary session was dedicated to discussing this issue. The Kut mall fire was included in the meeting's agenda, and a three-day mourning period was declared in Iraq for the victims.
Urgent: The Council of Ministers approves the memorandum of understanding on salaries with Kurdistan.
The Council of Ministers approved the Memorandum of Understanding with the region and praised Talabani's efforts.
The Federal Council of Ministers, in an extraordinary session held today, Thursday, headed by Prime Minister Mohammed Shia al-Sudani, approved the financial memorandum of understanding signed with the Kurdistan Regional Government.
This development comes one day after the leader of the Patriotic Union of Kurdistan (PUK), Pavel Talabani, visited Baghdad, where he held a key meeting with the Sudanese Prime Minister. The meeting addressed ways to resolve outstanding issues between Erbil and Baghdad, most notably the salaries issue.
During the cabinet meeting, Al-Sudani thanked Pavel Talabani, head of the Patriotic Union of Kurdistan, for his efforts in ensuring the success of the negotiations and reaching an agreement between the region and Baghdad to resolve the issue of salaries for the region's employees.
It is noteworthy that the President of the Patriotic Union of Kurdistan, Pavel Jalal Talabani, arrived in the capital, Baghdad, this Thursday morning, for the second time in two days.
Informed sources confirmed that Talabani's visit, leading the Kurdish delegation, marked a decisive turning point in resolving the stalemate between the two sides. It directly contributed to reactivating official channels between the federal government and the regional government, expediting the signing and formal ratification of the memorandum of understanding.
The Kurdistan Regional Government, in turn, ratified the same memorandum at its weekly meeting held on Wednesday, welcoming the agreement and stressing the need to implement all provisions of the agreement, including the regular disbursement of the region's financial dues within the general budget.
The federal government is expected to begin transferring May salaries to approved bank accounts in the region within the coming hours, in accordance with the terms of the agreement.
This understanding represents an important step toward normalizing financial relations between Baghdad and Erbil, opening the door for further coordination on outstanding issues. This comes amid calls from political parties to prioritize dialogue and joint action to ensure financial and administrative stability throughout Iraq.
Baghdad - IQ publishes
today , Thursday, the exchange rates of the dollar against the Iraqi dinar in local markets. - Selling: 141,500 dinars for every $100. - Buying: 139,500 dinars for every $100. read 1395 dinars per $1
Prime Minister's Advisor: Economic and disciplinary factors behind exchange rate stability and dollar decline
Saleh explained, in a statement to Al Furat News Agency, that "the disciplinary factors were represented by tightening control over the circulation of the dollar in domestic transactions and completely prohibiting its use in local settlements and payments, in accordance with the law. He pointed out that these measures included bank deposit mechanisms for real estate transactions, which were previously the focus of demand for cash dollars, and the dinar replaced them with remarkable success. He noted that this success is credited to the Central Bank of Iraq and its monetary policy, despite the criticism it faced. Saleh added that the exchange rates in the parallel market would have been in line with the official markets, had it not been for the recent geopolitical tensions in the Middle East, which caused a difference of 142 dinars per dollar."
Foreign trade financing and monetary strengthening mechanisms
The financial advisor explained that "one of the most important success factors that led to the decline in the parallel market's strength is the direct financing of small traders' foreign trade from official dollar outlets at a rate of 1,320 dinars per dollar, without the need for intermediaries. He pointed out that small traders' imports constitute more than 50% of Iraq's total foreign market trade."
Saleh did not fail to point out that the mechanisms for Iraqi banks' foreign currency cash consolidation with correspondent banks have become easier as an alternative to the Central Bank's window and previous platforms, which were abolished at the beginning of the year. He emphasized that these mechanisms have proven successful in ensuring the official exchange market dominates the entire market for foreign transfers at the fixed exchange rate of 1,320 dinars per dollar.
Trade Policy and the Use of Electronic Payment
Saleh also emphasized the role of trade policy, which intervened for the first time by opening giant shopping centers and expanding into this area (hypermarkets), describing it as a "price defense policy in favor of the official exchange rate," and weakened market demand for financing some of its trade from the parallel market, which had become "highly costly."
Finally, the financial advisor noted the growing public trend toward widespread use of electronic payment cards funded at the official exchange rate (1,320 dinars), which has become "one of the modern travel customs and traditions in Iraq." He added that travelers now receive a share of cash dollars when traveling, subject to very transparent and strict controls.
The State Administration meeting to decide on the salaries of regional employees has been postponed for 11 days.
An informed source revealed on Thursday evening that the State Administration Coalition meeting has been postponed until after the Federal Court issues its ruling on the salaries of Kurdistan Region employees.
The State Administration Coalition is a political alliance formed after the early parliamentary elections held in October 2021. It includes a group of Shiite, Sunni, and Kurdish political forces that later formed the Iraqi government headed by Mohammed Shia al-Sudani in 2022.
The source explained to Shafaq News Agency, "The State Administration Coalition forces agreed to postpone their meeting, which was scheduled to be held yesterday, Wednesday, due to the Federal Court not issuing its decision regarding the salaries of the region's employees, which was supposed to be issued on July 28. Therefore, no decision can be issued by the State Administration Coalition regarding the issue of the salaries of the region's employees before the Federal Court announces its decision in this regard."
He pointed out that "the issue of the region's salaries and their settlement in official banks, along with the issue of the region's oil and the resumption of exports, were among the most important issues on the agenda of the State Administration meeting. However, intensive consultations that took place among the leaders of the State Administration Coalition led to the postponement of the meeting until after the announcement of the Federal Court's decision, and the court's failure to preempt any decision on the contentious issues between Baghdad and Erbil."
The source noted that "objections by Kurdish and Sunni forces to the inclusion and discussion of the Popular Mobilization Forces law during yesterday's parliamentary session, Wednesday, were among the reasons for postponing the meeting."
An informed political source said yesterday that the leaders of the "State Administration" coalition will hold an expanded meeting in Baghdad on Wednesday evening to discuss outstanding issues, including the Kurdistan Region's employee salary crisis, the issue of oil exports from the region, and the resolution of the issue of the presence of Turkish forces and the Kurdistan Workers' Party (PKK).
The source added to Shafaq News Agency that the meeting comes as the leader of the Patriotic Union of Kurdistan (PUK), Pavel Talabani, arrived in Baghdad at the head of a high-level delegation to hold talks with Prime Minister Mohammed Shia al-Sudani and other officials regarding the financial and political disputes between the federal government and Erbil.
Last Monday, the Federal Supreme Court adjourned the hearing of a lawsuit filed before it to issue a "jurisdiction order" requiring the federal government to distribute salaries to Kurdistan Region employees until July 28.
Ali Hama Saleh, the leader of the "Mawqif" movement, announced a new legal step by filing a lawsuit with the Federal Court to demand the payment of salaries of Kurdistan Region employees.
This move comes as part of the defense of the rights of employees, who should not be victims of any political or administrative dispute. Legal pressure has become necessary to ensure timely payment of salaries.
Relations between Baghdad and the Kurdistan Regional Government (KRG) have been strained for months over delayed transfers of financial allocations and the suspension of the region's oil exports following a Federal Court ruling that unilateral exports were unconstitutional.
A temporary agreement between Erbil and Baghdad for a year regarding salaries, oil and local revenues.
Minister of Justice Khaled Shawani announced, today, Thursday (July 17, 2025), a temporary agreement between Erbil and Baghdad for a period of one year regarding salaries and oil and local revenues.
In an interview with Kurdish media outlets monitored by Baghdad Today, Shawani said, "The agreement between Erbil and Baghdad is for a period of one year, until the 2026 budget law is ratified."
He added that Baghdad will pay salaries for May first, followed by the rest of the months. He explained that, under the agreement, the Kurdistan Regional Government will deliver 230,000 barrels (per day) to SOMO and 120 billion dinars in local revenues to Baghdad monthly.
Kurdistan Region ratifies new financial agreement with Baghdad
The Kurdistan Regional Government's Council of Ministers approved a new understanding with the federal government on Wednesday, which includes mechanisms for disbursing salaries and financial dues to the region's employees, in addition to mutual financial and oil commitments.
The council held its meeting, chaired by Prime Minister Masrour Barzani, with the participation of Deputy Prime Minister Qubad Talabani, according to an official statement issued by the regional government.
At the beginning of the meeting, the Council of Ministers condemned the terrorist attacks targeting the region's oil fields, which led to material losses in the energy sector, stressing that their aim was to harm the economic infrastructure. The Council called on the federal government to take firm legal measures to stop these attacks and hold those responsible accountable.
The meeting also discussed the negotiating process with the federal government regarding the financial situation and salaries of the region's employees, with the Prime Minister and his deputy providing a detailed explanation of the results of the talks held in Baghdad yesterday.
According to the statement, the understanding included the federal government sending salaries and financial dues to the region in accordance with the new agreement. The Council of Ministers welcomed these understandings and decided to proceed with their implementation.
In a related development, Ali Hama Salih, head of the "Mawqif" bloc in the Kurdistan Parliament, wrote in a Facebook post that the regional government, under the agreement, agreed to deliver 120 billion dinars per month in local revenues, in addition to 230,000 barrels of oil per day to Baghdad.
The Parliamentary Oil Committee reveals the region's approval to hand over its oil and revenues, and an important meeting will be held within two days.
Al-Fares explained, during his appearance on the "Free Talk" program on Al-Furat satellite channel, that: "The regional government will hand over 120 billion dinars per month in non-oil revenues, in addition to handing over 230,000 barrels of oil per day to SOMO in exchange for paying employee salaries."
He explained that "production from refineries and domestic consumption in the region does not exceed 110,000 barrels per day, while OPEC confirmed the smuggling of up to 300,000 barrels from the region," noting that "400 smuggled oil tankers were recently seized in Afghanistan."
Al-Fares pointed out that "the region has demanded that the government impose oil transport fees through the port of Ceyhan, which passes through its territory, and that these points raise disputes with the federal government due to their conflict with the budget law, which the latter has rejected."
He stressed that "the agreement included contracting with an American consulting firm to assess the production rate and lifespan of oil wells, a significant issue for the region that has yet to be resolved."
Regarding the electricity sector, Al-Fares pointed to "fears of a gas shortage by 2028, which will impact the operation of power plants, especially with increasing demand and the unsuitability of current infrastructure," ruling out "Iraq's ability to achieve self-sufficiency by 2028."
He noted "the presence of significant investments from major companies such as Total of France, which is investing in projects worth $600 million, in addition to local investments in the Akkaz field, which contains a strategic gas reserve that has not yet been optimally exploited."
Al-Fares added, "There is significant overlap between the ministries of oil and electricity and the governorates, which hinders cooperation," stressing that "Parliament intends to amend the governorate law to grant local governments the authority to manage energy distribution and address disruptions."
Regarding petroleum derivatives, Al-Fares emphasized "the success of the refining sector, which has achieved self-sufficiency in kerosene and reduced the need for gasoline, while emphasizing the need to boost investment in this sector to achieve complete self-sufficiency."
Kurdistan Democratic Party: We are awaiting the results of the meetings and hope for solutions before making any decisions.
Karim told Al Furat News Agency, "An envoy from the region was sent to the State Administration Coalition meeting. This envoy speaks on behalf of the two parties in the region. We are looking at the side of the fact that as long as the meetings are ongoing and there are promises to resolve the crisis from prominent leaders, we will proceed in a positive manner."
He added, "If we reach a state of despair, we will have decisions that will be announced then."
Iraq approves deal to resolve financial, oil disputes with KRG
Iraq’s Council of Ministers on Thursday approved a new financial agreement with the Kurdistan Regional Government (KRG), paving the way for the resumption of salary payments to the Region’s public employees and the restart of the Kurdish oil exports.
“The federal government at the Council of Ministers meeting today decided to release May salaries [of KRG’s civil servants],” Iraqi Justice Minister Khalid Shwani, a Kurd, told Rudaw, adding that subsequent months’ salaries will be released after “they are audited by special commissions.”
An informed source in Baghdad told Rudaw, on condition of anonymity, that May salaries are expected to be disbursed on Sunday - over two months after transfers were halted due to a budget dispute between Baghdad and Erbil.
Shwani said the agreement is set to remain in effect through the end of the year and represents “a long-lasting framework” for financial cooperation between the federal and regional governments until a new budget law is passed in 2026.
According to the agreement, a copy of which has been seen by Rudaw, the KRG is obligated to export all of the oil produced from its fields - estimated at 230,000 barrels per day - through Iraq’s State Oil Marketing Organization (SOMO). The KRG will retain 50,000 barrels per day for local consumption, covering production costs, while the federal Ministry of Oil may provide refined oil products equivalent to 10,000 barrels per day if needed.
The KRG is also obligated to hand over 120 billion Iraqi dinars (nearly $92 million) in non-oil revenues monthly for each month of May and June. In return, the federal Ministry of Finance will pay the KRG $16 per barrel as production fee, in accordance with the amended federal budget law. International oil companies operating in the Kurdish region will receive some of the fee.
A working group from both the federal and regional Boards of Supreme Audit will review and classify oil revenues and determine Baghdad’s share within a month.
The Ministry of Finance is expected to “immediately begin disbursing” salaries for May, June, and subsequent months, according to the text of the agreement.
“We welcome this step and expect the Federal Government to send the salaries and financial entitlements of the Kurdistan Region,” said Kurdistan Region Prime Minister Masrour Barzani in a statement.
“I have great appreciation for the patience and endurance of the people of Kurdistan,” he said, adding that “I hope that salaries and financial entitlements, which are the legitimate right of the people of Kurdistan, will no longer be mixed with any problems or disputes, and that we resolve our issues within the constitutional framework and with respect for agreements.”
Minister Shwani said the deal also accounts for emergency situations that may prevent the KRG from fulfilling its commitments.
News publishes the text of the agreement between Baghdad and Erbil regarding salaries and the region's oil.
News publishes the text of the agreement between Baghdad and Erbil regarding salaries and oil in the Kurdistan Region of Iraq.
The following is the text of the agreement, according to a statement from the office of Prime Minister Mohammed Shia al-Sudani:
The Council of Ministers decided the following:
First: Oil delivery file:
1- The regional government shall immediately begin delivering all oil produced from the oil fields in the region to the State Oil Marketing Organization (SOMO) for the purpose of export. The Federal Ministry of Finance shall be obligated to pay an advance to the regional government in the amount of $16 (in kind or cash) for each barrel received in accordance with the law amending the budget law, provided that the quantity received is not less than the current 230 thousand barrels per day, and any increase in production shall be added to it through the Joint Measurement and Calibration Committee. In the event that exports are halted for any reason, the entire aforementioned quantity shall be delivered to the Federal Ministry of Oil.
(Clarification: The total production currently amounts to 280,000 barrels per day, according to the region’s reports, of which 50,000 barrels per day are allocated for local consumption in the region, and the remaining 230,000 barrels per day, as well as any future increase in production, are delivered to SOMO for export purposes.)
2- A quantity of 50 thousand barrels per day shall be allocated for local consumption purposes in the region, provided that the regional government is committed to paying the costs of production and transportation for this quantity, and that the revenues from the sale of petroleum derivatives shall be transferred to the federal public treasury after deducting the costs of production, transportation and refining. In the event that the region needs it, the federal Ministry of Oil shall, in accordance with the law, supply the region with quantities of products, not exceeding the refining output of 15 thousand barrels of crude oil per day. A joint committee from the federal Ministry of Oil and the Ministry of Natural Resources in the region shall evaluate the region’s actual need for petroleum products for the purpose of allocating them, provided that it submits its report within two weeks to the federal Council of Ministers for decision.
Second: Non-oil revenues file:
1- The regional government shall deliver an amount of (120) billion dinars as an initial estimated payment for the state treasury’s share of non-oil revenues for the month of May to the Federal Ministry of Finance, to be settled after the audit is completed in accordance with paragraph (2) below.
2- A working group shall be formed from the Federal Ministry of Finance and the Federal Board of Financial Supervision, in coordination with the Ministry of Finance and the Board of Financial Supervision in the region, for the purpose of classifying and auditing non-oil revenues and determining the federal government’s share thereof, starting from May 2025, taking into account the values of non-oil revenue rates according to the audit balances mentioned in the joint reports between the Federal Board of Financial Supervision and the Board of Supervision in the region, since the entry into force of the Federal General Budget Law, and the team shall submit its report within two weeks to the Federal Council of Ministers for consideration.
3: A joint committee shall be formed between the federal government and the regional government to complete the localization of salaries in the region in accordance with the decision of the Federal Court, provided that it completes its mission within a period not exceeding three months, and funding at the end of the aforementioned period shall be exclusively for the localized salaries.
4: A team will be formed from the Federal Ministry of Finance and the Federal Board of Financial Supervision, in coordination with the Ministry of Finance and the Board of Financial Supervision in the region, to determine the amount exceeding the region’s share of actual spending and how to address it in accordance with the Federal General Budget Law for the years (2023-2024-2025), provided that its report is submitted within a maximum period of two weeks to the Federal Council of Ministers.
5: The Ministry of Finance will begin disbursing salaries to the region's employees for the month of May as a start to implementing the agreement after the Federal Ministry of Oil/SOMO approves the receipt of the full quantity of oil mentioned in paragraph 1 (currently 230,000 barrels per day) at the port of Ceyhan, in accordance with the law.
6: The periods mentioned in this decision shall begin from the date of its approval by the Council of Ministers.
The Council of Ministers issues a decision to immediately deliver oil produced by SOMO to Kurdistan.
The Council of Ministers issued a decision today, Thursday, stipulating the immediate delivery of the Kurdistan Region's oil production to SOMO in exchange for the payment of salaries to the region's employees.
A government source told Mail that "the Council of Ministers issued a decision stipulating that Kurdistan immediately hand over the oil produced by SOMO in exchange for paying the salaries of the region's employees."
Earlier on Thursday, the Council of Ministers held an extraordinary session chaired by Council Speaker Mohammed Shia al-Sudan
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Al-Sudani and Rashid discuss resolving the issue of salaries for Kurdistan Region employees.
President Abdul Latif Jamal Rashid and Prime Minister Mohammed Shia al-Sudani discussed a number of issues on Thursday, including elections and salaries for Kurdistan Region employees.
A statement from Al-Sudani's office received by Al-Eqtisad News stated that "Prime Minister Mohammed Shia Al-Sudani received President Abdul Latif Jamal Rashid."
At the start of the meeting, the two sides expressed their "solidarity with the families of the victims of the unfortunate fire in Kut, affirming their commitment to providing them with full assistance, investigating the causes of the tragic incident, and taking the necessary measures in this regard."
He added that "the meeting discussed the general situation in the country, the importance of strengthening cooperation between all authorities, and resolving common issues between the federal government and the Kurdistan Regional Government, in accordance with the constitutional and legal frameworks in force regarding the transfer of oil and non-oil revenues to the federal government, and resolving the issue of salaries for the region's employees. It also discussed the ongoing preparations for holding the legislative elections on their scheduled date, so that their results will truly express the will of the Iraqi people."
He pointed out that "the meeting addressed developments in the region, where the Zionist entity's bombing of sites in the Syrian capital, Damascus, was condemned as a serious violation of Syria's sovereignty. The meeting also emphasized support for regional and international efforts to prevent the expansion of the conflict and spare the region the repercussions of war, and to work to stop the aggression on the Gaza Strip and Lebanon, and to deliver humanitarian aid to the besieged Palestinian people in the Gaza Strip."
American companies seek investments in Iraq's gas sector.
New tender issued for a floating liquefied natural gas (LNG) terminal project
With Iraq suffering from a severe gas and electricity shortage, especially in the summer, and insufficient domestic production, a large portion of which is flared as associated gas, and with gas imports from Iran having fallen by more than half, the country has re-tendered the construction of a floating storage and regasification unit (FSRU) to convert liquefied natural gas into gas for use in power plants. The American company Accelerate Energy currently appears to be the favorite to implement this project.
A report published on the American energy news website Oil Price indicates that Iraq's plan to begin importing liquefied natural gas (LNG) this summer has not been successful, prompting the government to urgently revise its ambitions for the floating terminal. With electricity demand increasing and gas supplies scarce, the Ministry of Oil has re-tendered the FSRU in an attempt to secure regasification capacity in time for summer 2026. US-based Accelerate Energy is now the most likely supplier, after a previous agreement with the UAE's Breeze Investment failed to advance.
The report states that timing is critical, as Baghdad faces another peak season without enough gas to stabilize the electricity grid, while US sanctions and fluctuating Iranian supplies are narrowing Iraq's fuel options. The FSRU project will not only provide a technical solution, but could also be a turning point in Iraq's foreign energy policy by opening a commercial channel for importing gas from the United States.
Initial plans to import LNG were drawn up in early 2024, when the Ministry of Oil issued a limited tender to lease an FSRU, which would dock at one of the southern ports (Khor al-Zubair or Umm Qasr) and feed a 1.2 GW power plant under construction near Basra. Officials had hoped to have the unit operational before the peak summer of 2025, but this goal has not been met.
According to a report by MEES on July 11, initial talks with Breeze Investment stalled in June after the company's vessels were reassigned. Ezzat Saber, the deputy oil minister for gas affairs, told reporters that the government had urgently re-tendered the contract and expected to sign it within 10 days. However, any new agreement would likely extend beyond the current summer window, as contract timing, permitting, offshore infrastructure preparation, and ship commissioning all take time. Even if a quick deal is signed in July, gas flows are unlikely before the second quarter of 2026.
Baghdad is currently in active talks with Accelerate, which participated in the tender with Breeze earlier this year and is now the only viable short-term supplier. Accelerate owns a global fleet of regasification vessels and has recorded successful operations in several other countries. Its Exemplar vessel is reportedly completing a short mission in the Mediterranean and could reposition to Iraq in early 2026 if contracted soon.
For this reason, LNG imports are Iraq's most visible response to the gas supply crisis that has affected the electricity sector for more than a decade. Associated gas collection and processing remain insufficient and often flared, while non-associated fields remain undeveloped. The deficit peaks in the summer, when electricity demand exceeds 30 gigawatts. Production is expected to fall by more than 6 gigawatts during peak periods this year.
Iraq has long relied on gas and electricity imports from Iran to bridge its deficit, but this lifeline is beginning to shrink. In March 2025, the Trump administration allowed the sanctions waiver that had allowed Iraq to import electricity from Iran to expire, halting those imports and triggering emergency measures. While the waiver allowing the import of Iranian gas remains in place, supplies have declined sharply. In early 2025, Iraq was receiving around 50 million cubic meters per day of Iranian gas, but by June, that figure had fallen to around 25 million cubic meters, according to government data.
The anticipated FSRU represents more than just a temporary solution; it will give Iraq its first access to international LNG markets and open a new, seamless supply channel.
From the United States' perspective, Accelerate's potential role as a supplier and operator presents an opportunity to strengthen strategic energy economic ties with Baghdad.
According to a Bloomberg report, with Iranian gas imports declining by about 25 million cubic meters per day, Iraq reported in early July a decrease in electricity generation capacity of about 3.8 gigawatts.
Has the Central Bank destroyed the private banking sector in Iraq forever?
A dysfunctional banking sector in an oil country
Although Iraq possesses vast oil wealth, its banking sector remains primitive, lacking depth and reliability. This is clearly demonstrated by the weakness of financial inclusion, with only 19% of citizens owning a bank account, one of the lowest rates in the region. This weakness reflects a profound structural flaw in the relationship between citizens and banks and raises fundamental questions about the effectiveness of monetary policies and banking supervision in Iraq.
Controversial Monetary Policies
: In recent years, the Central Bank of Iraq (CBI) has pursued erratic monetary policies, most notably uncontrolled monetary expansion. The money supply increased from 46 trillion dinars to more than 100 trillion dinars in just two years, without corresponding real economic growth. This led to inflation exceeding 7.5%, prompting the CBI to raise interest rates to 7.5% before later reducing them to 5.5%, a move with no tangible impact on the market. Furthermore, a large gap remained between the interest rate on loans, which exceeds 10%, and the interest rate on deposits, which barely reaches 7%, deepening citizens' reluctance to deposit and weakening banks' ability to provide financing.
Cash Outside the System and Loss of Trust:
The problem lies not only in policies, but also in the grim reality that the vast majority of cash in circulation is outside the banking system. This massive leakage weakens banks' ability to perform their role as financial intermediaries and reflects a real crisis of confidence between citizens and banks. Following banking bankruptcy scandals, the dominance of partisan figures in some private banks, declining services, and the absence of any effective deposit insurance system, citizens have come to view banks as a threat rather than a refuge.
Consumer loans without real development.
One of the most significant failures is that most of the loans granted by banks in recent years have gone toward consumption, not production. Car financing, personal loans, and installments for recreational purposes have gone unmet, with no real focus on supporting productive projects or small businesses. This has led to increased speculation in the real estate market and rising land prices, without any real production or job creation. Instead, it has led to population and urban expansion without a corresponding economic structure.
The Iraqi banking sector is dominated by government monopoly and administrative laxity
. Rafidain and Rashid Banks control most of the sector's assets, but their performance is weak, their administrative structures are clearly lax, their branches are not electronically connected, and they lack modern technical infrastructure. Meanwhile, the Central Bank has failed to develop a strict regulatory framework or impose governance on bank boards, allowing small financial institutions to operate outside regulatory control for years.
The Currency Window as an Entryway for Money Laundering:
One of the most dangerous tools that has contributed to undermining the banking system is the foreign exchange window. The central bank sells dollars at the official rate to private banks, then resells them on the parallel market at a significant profit margin. This mechanism has provided an ideal environment for money laundering and smuggling abroad, exploiting weak banking oversight and duplicate names and documents in transfer requests. Many banks have exploited these discrepancies to make illicit profits, and some have had their licenses revoked following international intervention.
International sanctions point to a dysfunction
. Starting in 2022, the United States began imposing a ban on a number of Iraqi banks from dealing in dollars due to suspicions of suspicious transfers and money laundering. The list later expanded to include new banks, disrupting a significant portion of foreign trade and remittances and negatively impacting the Central Bank of Iraq's credibility with international institutions and correspondent banks.
Banking Licenses Without Clear Regulations
. In recent years, the Central Bank of Iraq has granted unprecedented numbers of new banking licenses, bringing the number of private banks to over 70, without any economic justification or genuine assessment of market needs. This quantitative expansion has come at the expense of quality and oversight, contributing to the fragmentation of the banking market and the creation of fragile entities, both financially and administratively weak, often exploited as fronts for partisan agendas or foreign interests.
Despite the clarity of
the Private Banking Law in setting a maximum foreign ownership percentage in Iraqi banks, not exceeding 25%, the Central Bank has unjustifiably overlooked this restriction. Foreign financial institutions have been allowed to own significant stakes in a number of banks, either directly or through local front companies. This has led to an imbalance in the ownership structure and created external financial dependency, threatening Iraq's economic decision-making and undermining the independence of the national banking system.
Bleeding Profits Abroad Without Investment
: In a dangerous precedent, the Central Bank has allowed bank managements—mostly owned by foreign institutions—to transfer more than 75% of their annual profits abroad in the form of dividends, without requiring them to reinvest a portion of these profits within the Iraqi market. This behavior violates the most basic rules of development banking and should have been addressed with clear measures compelling these banks to develop their services, strengthen their capital, or contribute to national investment projects, rather than becoming mere channels for transferring hard currency abroad.
Urgent international reform advice:
Several international institutions, including the US Treasury , the International Monetary Fund, and the World Bank, have offered clear recommendations. Prominent among them are: stricter compliance with anti-money laundering and counter-terrorism financing laws, enhanced transparency in dollar transactions, strengthened internal and external oversight of banks, asset quality reviews, and modernized the sector's digital infrastructure. These institutions also called for raising minimum bank capital and merging or liquidating distressed banks to create a more robust system.
The Central Bank is directly responsible.
The Central Bank is not only a neutral supervisory body, but it is also a genuine partner in the crisis. It allowed the currency window to continue despite its risks, failed to require banks to adhere to international governance standards, was lax in enforcing controls on foreign ownership, and failed to establish an effective legislative framework to protect depositors or regulate the banking structure. Its responsibility is not merely technical, but also ethical and institutional in the face of an economy being drained.
Despite the bleak outlook, there is still
a chance to save the Iraqi banking system. This requires political and professional will, beginning with legislative reform, imposing strict oversight, enhancing transparency, and cooperating with international institutions to restore confidence. There can be no real development without a strong banking sector, and no successful banking sector without an independent and effective central bank that understands that it is not just a guardian of liquidity, but also a stabilizing force
Sabotage operations hover over Kurdistan's oil... The Iraqi economy is in the line of fire.
Oil advisor Govind Shirwani revealed on Thursday (July 17, 2025) the extent of the heavy losses caused by drone strikes on oil fields in Kurdistan, warning of catastrophic repercussions that threaten the entire national economy.
In a statement to Baghdad Today, Sherwani said, "Four of the region's main oil fields have suffered severe damage as a result of drone strikes," noting that "the situation may prompt foreign companies operating in these fields to temporarily suspend their operations until genuine security guarantees are provided for the safety of their personnel and the continuity of their operations."
He added, "Targeting these facilities not only affects the region, but also deeply impacts Iraq's oil economy as a whole, especially in light of the talk of a new agreement to deliver oil to SOMO," emphasizing that "the biggest loser from this escalation is the Iraqi people and their economy."
Sherwani warned that the continuation of these attacks could lead to a broader withdrawal of oil companies, undermining the achievements of the regional government's negotiations with the federal government, saying, "What politics has built is ruined by marches."
These developments come at a sensitive time regarding the oil dispute between Baghdad and Erbil, amid attempts to consolidate revenues and strengthen trust between the two sides, while recent attacks threaten to return matters to square one.
Masrour Barzani announces an agreement to pay salaries to Kurdistan Region employees.
Kurdistan Regional Government Prime Minister Masrour Barzani welcomed on Thursday the agreement reached with the federal government in Baghdad to pay the salaries of the region's employees, calling for the payment of the entitlements of the people of Kurdistan without any problems or disputes.
Barzani said in a statement received by Shafaq News Agency, "After the Kurdistan Regional Government, out of concern for the public interest and to ease the burden on the citizens of Kurdistan, showed the utmost flexibility and fully implemented all its obligations, and after long efforts and dialogues, the Federal Council of Ministers announced today the reaching of a joint agreement between the regional and federal governments."
Barzani continued, "We welcome this step and look forward to the federal government taking the initiative to send the region's salaries and financial dues."
He added, "I have deep appreciation for the patience and steadfastness of the people of Kurdistan, and I thank all parties and entities that contributed and assisted in the efforts to resolve the salary crisis and have continued to support us."
He expressed his hope that "salaries and financial dues, which are a legitimate right of the people of Kurdistan, will be paid from now on without any problems or disputes, and that we will all work to resolve issues within the framework of the constitution and with full respect for the agreements concluded."
Regarding Kurdistan's security situation, Barzani called for "an end to attacks on the Kurdistan Region, especially those targeting oil fields. We hope the federal government will cooperate in identifying the perpetrators and taking the necessary legal action against them."
An informed source revealed details of a new financial agreement concluded between the federal government in Baghdad and the Kurdistan Regional Government on Wednesday, aiming to settle salaries, oil exports, and unify revenues.
The source told Shafaq News Agency that the agreement stipulates that the Kurdistan Regional Government will receive 240 billion dinars in revenues for May and June, at a rate of 120 billion dinars per month, in addition to delivering 230,000 barrels of oil per day to Baghdad, in exchange for the latter sending the salaries of the region's employees for those two months.
He indicated that the regional government will begin the process of disbursing local revenues from border crossings, along with the agreed-upon amount of crude oil, as part of the implementation of the terms of the new agreement.
The source added that the next phase will witness meetings between joint technical committees to review and audit figures and statistics related to oil exports and imports, as well as to discuss the region's share of the federal budget.
For his part, an Iraqi government source said that the federal cabinet is awaiting the implementation of the Kurdistan Regional Government's pledges to resolve the current crisis.
He explained that the federal government is awaiting an official letter from the Kurdistan Regional Government to begin implementing the agreement by the relevant committees.
The Kurdistan Regional Government's Council of Ministers approved the new understandings with Baghdad during its session held yesterday morning, Wednesday.
The roots of the recent salary crisis between the federal government in Baghdad and the Kurdistan Regional Government (KRG) lie in ongoing disagreements over oil export mechanisms and the unification of public revenues. This is a long-standing crisis that resurfaces from time to time, but it has significantly worsened since May 2025, when the federal government refused to send salaries to KRG employees.
Baghdad justified the delay in disbursement by Erbil's failure to deliver the agreed-upon quantities of crude oil (230,000 barrels per day) and its failure to transfer non-oil revenues from internal ports to the state treasury, which the federal government considered a violation of previous agreements included in the three-year federal budget law (2023-2025).
For its part, the regional government confirmed that it is facing technical and political difficulties in delivering the full amount of oil, especially given the ongoing suspension of oil exports via the Turkish Ceyhan pipeline since March 2023. This suspension stems from an international arbitration ruling against Turkey in the oil export dispute with Iraq. This has forced Erbil to rely on domestic exports to meet its financial needs.
PM Barzani Welcomes Federal Budget Agreement, Calls for End to Attacks on Kurdistan Region's Oil Infrastructure
“These attacks, especially on oil facilities, must end,” he stated. “We hope the federal government cooperates in identifying and holding the perpetrators accountable through legal means.”
Kurdistan Region Prime Minister Masrour Barzani on Thursday welcomed the Iraqi federal government's agreement to implement a balanced revenue-sharing deal with the Kurdistan Regional Government (KRG), calling it a positive step following months of negotiations and efforts aimed at easing pressure on the people of the Region.
Barzani’s remarks came after Iraq’s Council of Ministers approved a long-awaited agreement on budget allocations for the Kurdistan Region. "After the Kurdistan Regional Government, in the interest of its people and to reduce pressure on them, fulfilled all its obligations and demonstrated the utmost flexibility, and following significant effort and dialogue, the Iraqi Council of Ministers today approved a mutual understanding between both governments," Barzani said in a statement.
He expressed hope that the federal government would promptly disburse the Kurdistan Region’s public salaries and rightful financial entitlements, emphasizing the importance of resolving the salary issue, which has long burdened the Region’s public sector employees.
“I deeply appreciate the patience and resilience of the Kurdish people, and thank everyone who contributed to resolving the salary issue and stood by us in support,” Barzani added. “I hope that these rightful financial dues—public salaries and entitlements—will no longer be entangled in political disputes or disagreements, and that all issues are resolved within the framework of the Constitution and mutual agreements.”
Barzani also addressed the recent escalation in drone and rocket attacks on the Kurdistan Region, particularly its oil infrastructure. “These attacks, especially on oil facilities, must end,” he stated. “We hope the federal government cooperates in identifying and holding the perpetrators accountable through legal means.”
The statement comes amid ongoing drone attacks targeting key energy infrastructure across the Kurdistan Region, raising concerns over the security of Iraq’s general economic stability.
This is for the people in Baghdad and the rest of country
The Central Bank to Al-Maalouma: There are no concerns about salary disbursements, and cash liquidity is available
Financial expert and member of the Central Bank of Iraq's board of directors, Ahmed Brihi, confirmed on Thursday that media reports of a cash liquidity crisis affecting salary disbursements are inaccurate and contain significant exaggerations and misinformation. He emphasized that salary disbursements are safe and currently face no risks.
In a statement to Al-Maalouma, Brihi said, “The repeated talk on some satellite channels about the existence of a cash liquidity problem and its impact on salary delays is not based on reality, but rather includes unjustified exaggerations.” He pointed out that "salary delays - if they exist - are often due to technical and administrative reasons, and have nothing to do with a lack of liquidity."
He added that "the concept of cash liquidity is sometimes misunderstood," noting that "the issue is not a shortage of cash available to the government, but rather sometimes relates to providing new revenues to the federal budget or activating borrowing mechanisms, whether domestic or foreign."
Brihi pointed out that "government payment procedures are proceeding normally, and there are currently no concerns regarding the disbursement of salaries."
Iraq's cash reserves and the need to reflect them on daily life
Whether Iraq's foreign exchange reserves rise or fall, they dominate the news and financial reports about the national economy. The latest announcement was that it reached $106.7 billion in its treasury, but these reserves are deposited outside the country. It occupies third place in the Arab world after Saudi Arabia and the Emirates, and surpasses Kuwait, Qatar, and Egypt. Meanwhile, gold reserves exceeded 163 tons, which makes Iraq fourth in the Arab world after Saudi Arabia, Lebanon, and Algeria.
However, the largest part of the reserve is located in American banks, and the government has no absolute control over its use except within narrow and marginal limits, and it is not moved except with the approval of the American Treasury. That is, it is not available to the Iraqi government to dispose of it as it sees fit and to implement its economic plans.
Development in any country is measured by the quality of services provided to its citizens, including electricity, water, education, and health. All of these services require funding to improve them, build new ones, and overcome the backwardness that plagues them. Development is measured not by hoarded, frozen gold, but rather by its use in achieving sustainable development.
These attractive resources and others require a stable, unvarying political environment and climate, and a solid system of government, in order to exploit the vast resources, activate the national economy, and build a transparent competitive environment for foreign companies to invest in Iraq. It is necessary to reform the existing political authority and the legal structure of the state, and to eliminate corruption and the requirements of honest responsibility, in order to make Iraq a profitable market in reality.
There is an urgent need to invest this reserve to secure the basics of living, create job opportunities for the unemployed, rehabilitate idle factories, mechanize agriculture, and reduce inflation. Before all of this, appropriate means must be found to return it to full Iraqi control and use it in development and emergency projects without restrictions that undermine sovereignty.
This financial figure pleases the citizen, makes him valuable and makes him proud of his achievement when it is used to protect the dinar, stabilize the exchange rate, end the so-called parallel market, support prices and make them available to the people, build new factories, solve the crises that citizens suffer from, alleviate their suffering and the exhaustion of their income, and raise their standard of living on all levels. In short, his country should be among the countries that possess such capabilities.
This huge cash reserve is in a state of constant danger and is subject to American policy, which can prohibit its use at any time and is subject to sanctions, the least of which is freezing or even confiscation, at the moment of independent action or divergence from American policy. Hence, it is necessary to work to ensure that the largest possible amount of it is under full and absolute Iraqi sovereignty, and that it is transformed into sustainable development projects, and that it is diversified and within the framework of the possibilities for disposing of it. We have the experiences of major and more influential countries that have what enables them to defend their rights and how they suffer from keeping their reserves abroad, controlled by the United States.
Rep. Congressman warns al-Sudani: Freeze on oil funds looms
US Republican Congressman Joe Wilson called for preventing Iraq from accessing its oil revenues held at the Federal Reserve, as a means to pressure Iraqi Prime Minister Mohammed Shia al-Sudani to stop attacks on foreign oil companies operating in the Kurdistan Region.
Posting on X, Wilson wrote, “Attacks by Iran-backed Iraqi militias against US forces and American oil companies in the Kurdistan Region of Iraq will not be tolerated. ” urging al-Sudani to take decisive action, or “face serious consequences.”
Attacks by Iran-backed Iraqi militias against US forces and American oil companies in the Kurdistan Region of Iraq will not be tolerated. Iraqi oil funds must no longer use the @federalreserve and Iraqi PM @mohamedshia must take decisive action or risk severe consequence.
— Joe Wilson (@RepJoeWilson) July 17, 2025
Meanwhile, A recent wave of nine drone attacks has dealt a serious blow to the Kurdistan Region’s oil sector, triggering shutdowns and placing vital infrastructure under growing strain.
Following UN Security Council Resolution 1483 in May 2003, Iraq’s oil and gas export revenues have been deposited in a special account at the US Federal Reserve known as the Development Fund for Iraq.
Five percent of these revenues were allocated to compensate Kuwait for damages from the 1990 invasion — a process that concluded in 2022 after Iraq completed payments totaling approximately $52.4 billion.
Iraq Agrees Oil Plan With Kurdistan as Export Deal Nears
Iraq approved a plan for its semi-autonomous Kurdish region to transfer oil to Baghdad, a key step toward resuming exports that have been halted for more than two years.
The Kurdistan Regional Government will supply Iraq’s state oil marketer SOMO at least 230,000 barrels a day for export, the federal government said after a meeting of the cabinet. On receiving the crude at Turkey’s Mediterranean port of Ceyhan, the export point of Kurdish oil, Baghdad will release funds for salaries of Kurdistan government employees.
The move is the strongest signal yet that a resumption of shipments from Kurdistan to global markets through a pipeline that was halted in March 2023 is near. A final deal would still need contracts with companies in the Kurdish region, which have said exports can only kick off when there’s clarity on compensation, including future payments and past dues.
Also read: Oil Firms in Kurdistan Await Deals as Iraq Nears Export Restart
The Iraq-Kurdistan agreement is “an important milestone toward the resumption of oil exports through the Iraq-Turkey pipeline,” said Myles B. Caggins III, spokesman for the Association of the Petroleum Industry of Kurdistan. The group’s members anticipate additional discussions with the governments “to establish written agreements, prior to resuming exports,” he said.
The companies would also have to bring online fields that were shut this week following a barrage of drone attacks. About 200,000 barrels a day of output has been halted, according to an official in the Kurdistan Regional Government.
The latest steps come just as the Organization of the Petroleum Exporting Countries and its allies have started boosting production quotas, giving some members the room to raise exports. Additional shipments would likely add to a supply surplus forecast for later this year.
Pipeline Closure Halted About 500,000 Barrels a Day of Iraqi Oil Flows
- btc-pipeline
- Iraq-Ceyhan pipeline
The amount of oil that will be handed over to SOMO is based on output of 280,000 barrels a day. Kurdistan will keep 50,000 barrels a day for its own requirements. Any increase in output will result in a higher share going to the federal government, Iraq said in the statement.
As part of the deal, the KRG will also pay 120 billion Iraqi dinar ($92 million) as an initial payment to the federal government as its share of non-oil revenues for May. A panel will be formed to determine the state’s future share.
Lost Revenue
Iraq is OPEC’s second-biggest oil producer, pumping the vast majority of its crude from the south. The country has been keen to increase output in the long-term and boost revenue after years of war and internal strife. The halted Kurdistan exports have resulted in about $25 billion in lost revenue, Kurdistan Regional Government Prime Minister Masrour Barzani said last month.
The pipeline saga started in early 2023 after Turkey halted the link that carried about half a million barrels of oil daily following an arbitration court’s order to pay Iraq $1.5 billion. Ankara had claimed the pipeline was shut because it needed repairs after two massive earthquakes in February that year, but later put the onus on Baghdad to restart operations. But financial and legal disagreements held back the resumption.
In February this year, Iraq’s parliament passed a plan to allow Baghdad to pay oil companies in Kurdistan an initial fee of $16 a barrel for production and transportation, which is higher than what it had proposed paying earlier.
Oil companies including DNO ASA, Genel Energy Plc and Gulf Keystone Petroleum Ltd. operate in the Kurdistan region.
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Iraq’s 1,320 Rate: What the IMF Just Confirmed.
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