Banking reform enters a decisive phase: The Central Bank and banks are in a race against time - Urgent
To avoid penalties
The video for this My FX Buddies Blog post is below here:
The Iraqi banking sector is going through a critical phase, where economic and financial considerations intersect with the demands of structural reform that have been postponed for years. After decades of challenges, and amid international and local pressure to improve the efficiency of the financial system, the reform paper launched by the Central Bank in coordination with an international consulting firm emerged as an attempt to rebuild trust and establish more robust rules for banking operations. The importance of this issue goes beyond the financial dimension; it extends to the broader institutional context related to the state's ability to formulate economic stability tools and meet transparency requirements, which in turn are linked to the confidence of investors and international donors.
In this context, economic expert Ahmed Abdul Rabbo, speaking to Baghdad Today, predicted that "the end of September will be the deadline for private banks to sign the final amendments to the reform paper submitted by the Central Bank of Iraq in coordination with Oliver and Iman." This timing reflects the Central Bank's awareness of the country's need to end the period of hesitation and embark on a clearly defined reform path. According to institutional estimates, setting a timetable for signing aims to overcome the procrastination that accompanied the first rounds of dialogue with private banks and transform reform from a theoretical idea into a practical commitment.
Adjustments in response to market pressures
Recent developments indicate that the reform was not imposed unilaterally, but rather came after a series of technical discussions with banks. Abdul Rabbo explained that "the Central Bank has made extensive amendments to the banking reform paper over the past weeks in response to the comments submitted by the banks, noting that it was keen to open an extensive dialogue with Iraqi banks to clarify the technical aspects of the reform paper."
This clarification reveals a collaborative process that balances reform requirements with market pressures. According to economic estimates, the central bank's understanding of banks' comments reflects its awareness that implementing strict measures without consensus could hinder the banking system's ability to keep pace with changes. At the same time, this dialogue seeks to establish the principle of transparency and a commitment to gradualism as a means of ensuring the effectiveness of reform, consistent with similar international experiences in restructuring banking sectors.
Gradual reform with privacy in mind
The discussion is not limited to the form of reform, but also includes its pace. Abdul Rabbo pointed out "the importance of implementing reform mechanisms gradually, taking into account the specificities of Iraq's economic reality." He emphasized the need to adhere to reform in principle, while formulating standards and procedures in a way that enhances confidence in the banking sector and contributes to its development.
According to economic readings, this position reflects the traditional tension between the imperative of rapid openness to international standards and the demands of a local reality characterized by fragility and instability. Gradualism, financial experts believe, reduces the shocks to small and medium-sized banks and gives the sector sufficient time to adapt to the new regulatory environment. This makes reform not only a tool for course correction, but also a means of rebuilding the contract between the state and the private financial sector on more sustainable foundations.
The essence and dimensions of the amendments
The recent amendments raise fundamental questions about the nature of the role private banks will play. Abd Rabbuh explained that the amendments "include extending the capital requirement for banks, reconsidering the ownership structure, and abolishing the foreign partner requirement, thus providing banks with greater flexibility in implementing reforms and strengthening their role in supporting the national economy."
This change has multiple institutional dimensions. Extending the capital requirement reduces immediate financial pressure on banks, while reconsidering the ownership structure opens the door to restructuring the relationship between local shareholders and regulatory authorities. The abolition of the foreign partner requirement reflects a shift toward enhanced independence, but it also raises questions about the ability of local banks to bridge the gap in expertise and technology typically provided by an international partner. According to economic estimates, these amendments represent an attempt to balance strengthening financial sovereignty with creating practical flexibility.
Timing and objectives of reform
Abdul Rabbuh believes that "banking reform comes at a crucial time, as Iraq seeks to enhance the banking sector's capacity to finance development and investment projects and reduce financial risks by adopting more flexible and transparent standards. The success of the reform paper represents a fundamental step toward achieving comprehensive financial stability and increasing confidence among local and international investors."
This link between reform and investment reflects that the goal is not limited to improving banking efficiency, but extends to building an environment that is attractive to capital. According to research estimates, the signals of confidence that banking reform can generate will be crucial in repositioning Iraq on the international financial map. Internal financial stability is also a prerequisite for confronting the recurring economic crises that the country has experienced over the past two decades.
Reform as a Barrier to Sanctions and Corruption
Banking reform was not only a domestic choice; it also came in response to external pressures linked to the risks of international sanctions. The delay in adopting the required standards and the banks' slowness in complying with regulatory controls opened the door for international oversight bodies to question Iraq's ability to manage its financial sector transparently. According to financial estimates, this situation increased the likelihood of some banks being placed on watch lists or sanctions, negatively impacting the smooth flow of financial transactions and external transfers.
Economists point out that part of this crisis was linked not only to technical shortcomings, but also to the dominance of influential groups within the banking sector, who took advantage of weak oversight and widespread corruption to obstruct any serious reform attempt. This dominance eroded international institutions' confidence in Iraq's ability to implement standards, making any delay in reform a direct threat to its economic interests. Therefore, the current reform paper should be read not only as a regulatory framework, but also as a fundamental line of defense to avoid potential sanctions and rebuild confidence in a sector that has for years been synonymous with fragility and political tensions.
Upcoming challenges and implementation prospects
Abdul Rabbo concluded by saying, "The coming weeks will witness ongoing negotiations and coordination between the Central Bank and private banks to ensure all parties agree on implementing reforms smoothly and effectively. These measures represent an opportunity to restructure the banking sector and strengthen its role in the national economy after years of financial challenges and economic fluctuations."
This statement outlines the next phase, where the debate is no longer about the feasibility of reform, but rather about the mechanisms for implementation and consensus. According to institutional estimates, the success of these negotiations will depend on the Central Bank's ability to strike a balance between the requirements of financial discipline and the flexibility demanded by banks. The gradual conclusion indicates that what has changed is Iraq's entry into a mandatory phase of reform after a long debate. What has not changed is the difficulty of building full consensus in a sector suffering from a long legacy of division and volatility. The expected impact is a gradual restructuring of the banking system, opening the door to enhanced confidence and stability, provided that pledges are transformed into measurable and enforceable obligations.
Iraq has golden opportunity to rise and progress, says former foreign minister
Hoshyar Zebari cites relative calm encouraging more investment, as well as positive change across the region
Iraq has a golden opportunity to "stand on its feet and move forward", former deputy prime minister and foreign minister Hoshyar Zebari has told The National, urging the country to seize the moment to consolidate its stability.
Baghdad has undergone a construction boom in recent years and investors are returning to the country. BP has resumed operations, while talks are under way with international oil giant ExxonMobil and an agreement in principle has been signed with Chevron.
Since early 2023, more than $100 billion in investment has been pledged – $64 billion from foreign investors and $38.6 billion from domestic companies – according to Haider Makiya, chairman of the National Investment Commission.
Several factors are driving this development surge. Security has improved to unprecedented levels; Iraq has never been as calm since 2003.
The relative calm in the country since late 2022, when the government of Mohammed Shia Al Sudani took over, has given authorities the confidence to launch infrastructure projects and introduce reforms aimed at improving the business environment.
This came after decades of war, UN-imposed economic sanctions, corruption and mismanagement that derailed growth in Iraq, despite it being the second-largest oil producer in Opec.
“Iraq is moving on many fronts. This year, Iraq is having national elections to elect a new government,” said Mr Zebari. “Economically, it is inviting foreign investors primarily because there has been better security throughout the country. There are fewer terrorist attacks and disturbances.
"It has also recently encouraged American companies, especially in the oil sector [to come and invest].”
Mr Zebari praised the “goodwill of the Iraqi government”, although the situation has not settled completely. He also warned that the drone attacks that were targeted at US investments in the semi-autonomous Kurdish region of northern Iraq in July could undermine investor confidence.
“The Iraqi government investigated this case, but when the probe concluded, they didn't name any of the culprits, which really discourages investors,” he said.
This summer, multiple explosive-laden drones struck oilfields in the Kurdish region over several consecutive days. Authorities there have blamed militias linked to the Popular Mobilisation Forces (PMF), a coalition of mostly Iran-aligned former paramilitaries now integrated into Iraq’s armed forces. Baghdad has rejected that accusation.
Iran and its proxies have long accused Iraqi Kurdistan of hosting Israeli intelligence bases and have previously struck Erbil with missiles.
“Iraq needs more than anything else a conducive environment for investors, security, the court, the laws and the control of the outlaws and militias,” said Mr Zebari.
Positive change
Last month, the Iraqi government withdrew the PMF integration bill from parliament after strong US pressure. The contentious draft law proposed restructuring and widening the powers of the group.
The US said the law could have undermined Iraq’s sovereignty and entrenched Iranian influence in the political and security realm.
The bill was expected to elevate the PMF, which was established in 2014 to help fight ISIS, to a status on par with the rest of the Iraqi military.
“The American position has been very outspoken recently, unlike before. They used to pass these messages through diplomatic channels. This time they have come openly and publicly that they will not support the passing of the PMF law,” said Mr Zebari.
He also noted a “positive change” in the region and a trend of bringing arms and non-state actors under state control.
Lebanon’s cabinet recently approved an army plan to reassert the state’s monopoly on weapons, including those belonging to the powerful Iran-backed Hezbollah.
In Syria, the transitional leadership under President Ahmad Al Shara is pursuing a campaign to fold remaining militias into a reconstituted national army as part of post-war state-building.
And in the Kurdish arena, the Kurdistan Workers’ Party (PKK) began signalling demobilisation this summer, the first concrete step towards a promised disarmament as part of a peace process.
Regional shifts
Regional power dynamics have shifted sharply over the past year after Iran’s so-called Axis of Resistance suffered a string of strategic setbacks. Hezbollah in Lebanon and Hamas in Gaza were left militarily degraded after wars with Israel depleted their fighters, leadership and capabilities.
Syria – long propped up by Iranian military and financial backing – saw the fall of the Assad regime late last year, removing a central client-state and a pivotal conduit for Tehran’s regional influence that connected Iran to the Mediterranean via Iraq and Lebanon. In Iraq, Iran's hold over the militias has also weakened.
In June, Israel, with US support in follow-up strikes, mounted a focused campaign against Iranian nuclear-related sites and associated military infrastructure, inflicting damage that disrupted Tehran’s programme. But Mr Zebari says the fall of the Assad regime in Syria was a “turning point in the Middle East”.
"It came at a pivotal moment. It came as a surprise to many regional powers, and I think it was a blessing for the entire region, although the new rulers were unknown. But politics accept realities on the ground,” he said. “The new rulers of Syria have made great strides in less than a year. They now enjoy acceptance and recognition within the Arab region and internationally.”
Parliamentary Services explains the reasons for the delay in the budget schedules and rules out its arrival in Parliament.
Al-Saadi told Al-Furat News Agency that "the government owes contractors a lot of money, which has delayed many projects in Baghdad and the provinces." He added that the failure to release these funds has resulted in the projects being unable to be completed.
He said, "We have repeatedly requested that the budget schedules be sent, but they have not arrived yet. With the election campaign set to start in the coming days, if the schedules are not approved, there will be no budget until the 2026 budget."
Al-Saadi confirmed that Parliament is still waiting for the budget, despite the government's intention to approve it to release the necessary funds to maintain the continuity of projects.
Expert: Iraq's single-source income threatens an economic crisis within years
link
Al-Mashhadani told Al-Furat News Agency that "the lack of data on private sector workers represents a real challenge to tax collection," noting that "the current year's budget included 27 trillion dinars in non-oil revenues."
He added that "the revenues generated from these budgets do not exceed 50% of the budgeted amount, while actual revenues were supposed to be higher than the specified amount," warning that "the economic situation in Iraq is facing an existing crisis, which could worsen in the coming years if real measures are not taken to diversify sources of income."
Al-Mashhadani continued, "Reliance on a single resource, oil, makes the Iraqi economy vulnerable to fluctuations in global markets, which directly impacts the general budget and the government's ability to meet expenditures."
An economic expert: The deterioration of the international security situation will negatively impact the global economy in general and the Iraqi economy in particular.
/Economic expert Raad Twaij affirmed that the deterioration of the international security situation will negatively impact the global economy and contribute to the militarization of the global economy and a decline in global growth rates, which will impact the Iraqi economy, which relies primarily on global demand for oil and freedom of transportation.
In a statement to the National Iraqi News Agency ( NINA ), Twaij said, "The global situation is heading towards polarization, whether as a result of the situation in Europe and the Ukrainian-Russian conflict, reaching the situation in the Middle East and the Arab-Zionist conflict and the brutal attacks of this entity on the region as a whole, in addition to the controversy represented by the imposition of escalating customs tariffs, and its contribution to a new global division between the North and the South, at the top of which is China with the United States of America.
He pointed out that these conditions will contribute to the militarization of the global economy and a decline in global growth rates, which will be reflected in the Iraqi economy, which depends mainly on global demand for oil and freedom of transportation, in addition to allocating a high percentage of resources to defense issues and the militarization of the Iraqi economy.
He continued, "Economic development and self-reliance must be accelerated, and economic rentierism and unnecessary imports must be reduced to reduce the economy's connection to the global economy."
Want to support My FX Buddies?
.png)
Support My FX Buddies Big or Small I appreciate it all
BuyMeACoffee CashApp:$tishwash
https://paypal.me/tishwash
.jpeg)
Iraq’s Asiacell boosts indoor coverage with VoWiFi service
Iraqi telco Asiacell says it has launched the country’s first Voice over Wi-Fi (VoWiFi) service that enables users to make and receive voice calls in spaces with Wi-Fi coverage in areas – especially indoors – where cellular signal quality is poor.
Asiacell said the VoWiFi service, launched on Monday, addresses challenges such as network congestion and weak indoor signals that have emerged in the midst of rapid urban expansion in Baghdad and other Iraqi cities along with rise of residential and commercial towers.
VoWiFi provides a connectivity option for subscribers in locations with limited mobile network coverage, such as high-rise buildings, basements, or remote locations. VoWiFi also serves as an offload option for Asiacell when the cellular network is congested.
Asiacell subscribers can use the VoWiFi service automatically at no extra charge, and without having to download an app, said Chra Hussein, Chief Commercial Officer at Asiacell.
“We developed this service to meet the needs of our users in different locations and to offer them clearer calls without any hassle,” Hussein said in a statement.
Non-oil revenues disrupt Kurdistan employees' salaries. Disputes referred to the State Shura Council - Urgent
Economic expert and advisor, Hevidar Shaaban, revealed on Friday (September 12, 2025) the latest details of the Kurdistan Region's employee salaries for last July, indicating that the main obstacle lies in the mechanism for dealing with non-oil revenues between Baghdad and Erbil.
Shaaban told Baghdad Today, "Both parties, the region and Baghdad, must agree on 100% of non-oil revenues. The region must hand over 100% of federal and non-federal revenues, and then Baghdad will return 50% of the revenues."
He explained that "non-federal revenues include local corporate taxes, but revenues from government ports and airports must be received by the Kurdistan Region through Rafidain Bank, using the ASYCUDA system."
Shaaban pointed out that "meetings are still ongoing regarding this issue, and this is the sticking point between the two parties, which led to the referral of the file to the State Shura Council."
The Kurdistan Region's employee payroll crisis has been recurring for years. Baghdad maintains that the delivery of non-oil revenues is a prerequisite for continued salary funding, while Erbil maintains that some of these revenues should remain within the region's jurisdiction. Referring the issue to the State Shura Council reflects the complexity of the negotiations between the two parties and indicates that a solution now requires a legal framework to definitively define obligations.
According to economic estimates, the ongoing dispute over non-oil revenues reflects a chronic crisis of confidence between the central government and the region, as this issue constitutes a focal point in the financial relationship between the two sides. Observers believe that resolving this thorny issue will pave the way for regular salary payments, while its continuation will deepen the region's economic and social crisis, especially as the months of backlog accumulate and popular pressure on the Kurdistan Regional Government grows.
NATO appoints Iraqi figure to high-level position
The Director of the Cybersecurity Directorate at the Ministry of Interior, Brigadier General Hassan Hadi Ladheeth, announced on Friday that he had been selected by the North Atlantic Treaty Organization (NATO) as Chair of the organization's Cybercrime Task Force for the Gulf, Middle East, and North Africa .
"I am pleased to announce a new and important milestone in my career (in addition to my current responsibilities), as I have been selected today to assume the position of Chairman of the NATO Cybercrime Task Force for the Gulf, Middle East and North Africa, " Latheez said in a statement, according to Shafaq News.
The Brigadier General explained, "This position was chosen following a competitive process involving experts from the Gulf, Middle East, and North Africa countries. The process was based on interviews and international standards, and the selection was based on experience and skills in the field of cybersecurity ."
This assignment, according to the Brigadier's statement, "is a continuation of his work as an international cybersecurity expert within the INTERPOL Cybersecurity Expert Group , a role that has enabled me to contribute to supporting global efforts to enhance digital security and address complex cyber challenges ."
Brigadier General Hassan Hadi Lathidh served as Director of the Cybersecurity Directorate at the Ministry of Interior and represented the ministry at numerous local, Arab, and international cybersecurity forums .
Zebari: Drone Attacks on Kurdistan's Oil Fields Threaten Iraq's 'Golden Opportunity'
Former Iraqi Foreign Minister Hoshyar Zebari has warned that drone attacks on the Kurdistan Region's oil fields could derail Iraq's "golden opportunity" for progress. He says the government's failure to name the culprits discourages the investment needed for the country's revival.
A series of targeted drone attacks on the Kurdistan Region's oil infrastructure this past summer could undermine a "golden opportunity" for Iraq to achieve lasting stability and economic progress, former Iraqi Deputy Prime Minister and Foreign Minister Hoshyar Zebari has warned.
In a wide-ranging interview with The National, Zebari cautioned that while Iraq is experiencing an unprecedented period of calm and attracting significant new investment, the failure of the central government to hold the perpetrators of these attacks accountable sends a chilling message to the international business community, threatening to derail the country's fragile revival.
The warning, delivered in an interview with The National, comes as Iraq enjoys a period of relative stability that has encouraged a surge in economic activity. However, the unresolved issue of the drone strikes in July, which targeted US investments in the Kurdistan Region, remains a significant point of friction and a test of the state's authority.
"The Iraqi government investigated this case, but when the probe concluded, they didn't name any of the culprits, which really discourages investors," Zebari stated.
This summer, multiple explosive-laden drones struck oilfields in the Kurdistan Region over several consecutive days. At the time, authorities in Erbil blamed the attacks on militias linked to the Popular Mobilisation Forces (PMF), a coalition of mostly Iran-aligned former paramilitaries that have since been integrated into Iraq’s armed forces, an accusation that Baghdad has rejected.
Zebari emphasized that for Iraq to truly seize its current moment of promise, it must first establish a secure and lawful environment. "Iraq needs more than anything else a conducive environment for investors, security, the court, the laws and the control of the outlaws and militias," he said.
Despite this significant threat, Zebari acknowledged that Iraq is at a pivotal and promising juncture, describing the current climate as a "golden opportunity" for the nation to "stand on its feet and move forward."
Since the government of Prime Minister Mohammed Shia al-Sudani took office in late 2022, the country has experienced a level of calm not seen since 2003, giving authorities the confidence to launch major infrastructure projects and pursue reforms aimed at improving the business environment. This has been a welcome change after decades of war, sanctions, corruption, and mismanagement that crippled growth in what is Opec’s second-largest oil producer.
The results of this newfound stability are tangible. Baghdad is in the midst of a construction boom, and international investors are returning.
According to The National, major energy firms like BP have resumed operations, while talks are underway with ExxonMobil and an agreement in principle has been signed with Chevron.
Haider Makiya, chairman of Iraq's National Investment Commission, was cited by The National to have confirmed that since early 2023, more than $100 billion in investment has been pledged, comprising $64 billion from foreign investors and $38.6 billion from domestic companies.
"Iraq is moving on many fronts," Zebari said. "Economically, it is inviting foreign investors primarily because there has been better security throughout the country. There are fewer terrorist attacks and disturbances."
He praised the "goodwill of the Iraqi government" in encouraging this revival, particularly its efforts to attract American companies in the oil sector.
This domestic progress, Zebari argued, is part of a much broader and "positive change" sweeping across the region, characterized by a distinct trend of bringing powerful non-state actors and their weapons under state control.
He pointed to several key examples of this regional shift. In Lebanon, the cabinet recently approved an army plan to reassert the state’s monopoly on weapons, a move directly aimed at the powerful Iran-backed Hezbollah.
In Syria, the new transitional leadership under President Ahmed al-Shara is actively pursuing a campaign to fold remaining militias into a reconstituted national army as part of its post-war state-building efforts.
In the Kurdish arena, the Kurdistan Workers’ Party (PKK) has begun signaling demobilization, a first concrete step toward a promised disarmament as part of a nascent peace process.
This trend, he explained to The National, is a direct result of a series of strategic setbacks suffered by Iran’s so-called "Axis of Resistance" over the past year.
Militant groups like Hezbollah in Lebanon and Hamas in Gaza have been left militarily degraded after devastating wars with Israel depleted their fighters, leadership, and capabilities. This has been compounded by a focused Israeli campaign, with U.S. support, against Iranian nuclear-related sites and military infrastructure, which has disrupted Tehran’s program.
However, Zebari identified the fall of the Assad regime in Syria late last year as the most significant blow to Tehran's regional influence.
"It came at a pivotal moment. It came as a surprise to many regional powers, and I think it was a blessing for the entire region," he said, describing the event as a "turning point in the Middle East."
The collapse of the Assad government removed a central client-state and severed a pivotal conduit that connected Iran to the Mediterranean through Iraq and Lebanon.
This weakening of Iranian influence is also being felt within Iraq itself. Zebari highlighted the recent withdrawal of a contentious PMF integration bill from parliament, a move that came after strong and, notably, public pressure from the United States.
"The American position has been very outspoken recently, unlike before. They used to pass these messages through diplomatic channels. This time they have come openly and publicly that they will not support the passing of the PMF law," Zebari observed.
The bill would have elevated the PMF to a status on par with the rest of the Iraqi military, a move the U.S. warned would have undermined Iraq’s sovereignty and further entrenched Iranian influence.
Ultimately, Zebari's assessment presents a picture of a nation at a crossroads, where a golden opportunity for economic and social progress is being directly challenged by the persistent and destabilizing threat of rogue militias.
The drone attacks on the Kurdistan Region serve as a stark reminder that until the state can establish a true monopoly on force and create a secure environment governed by the rule of law, the full potential of Iraq's revival will remain at risk.
Trump to have dinner Friday with Qatari Prime Minister
US President Donald Trump will host Qatari Prime Minister Mohammed bin Abdulrahman Al Thani for dinner on Friday at his golf resort in Bedminster, New Jersey, the White House announced.
Special Envoy Steve Witkoff is scheduled to attend the meeting, which comes after an Israeli attack targeting Hamas officials in Doha.
Israel angered many of its allies after the attack on the capital of Qatar, which is mediating negotiations for a ceasefire in the Gaza Strip.
Even Donald Trump issued a rare criticism of his ally, saying he was "not happy" with the Israeli strikes.
The Qatari official said earlier this week that Netanyahu "must be brought to justice" and that the attack "eliminated any hope" for the release of the hostages in Gaza.
US Secretary of State Marco Rubio met with Mohammed bin Abdulrahman Al Thani on Friday morning.
Meanwhile, the US State Department announced that Rubio will leave for Israel on Saturday to offer support ahead of the French-led UN General Assembly move to recognize the state of Palestine.
State Department spokesman Tommy Piggott said Rubio will discuss with Israeli leaders "our commitment to confronting anti-Israel actions, including unilateral recognition of a Palestinian state, which rewards Hamas terrorism."
Yemeni missile targets Israel
Yemeni forces launched a ballistic missile toward central Israel at dawn on Saturday, triggering air raid sirens in several areas, including Tel Aviv. Israeli air defenses claimed to have intercepted the missile.
The Israeli military said in an initial statement that it had "detected a missile being launched from Yemen towards Israel," adding that "air defense systems were working to intercept it," before confirming in a later statement the success of the interception.
Israeli authorities called for "following the defense instructions issued by the Home Front Command," while local reports indicated that explosions were heard in the skies over central Israel.
For his part, Yemeni Armed Forces spokesman Brigadier General Yahya Saree announced earlier today that "two Israeli military sites in the Negev and Umm al-Rashrash (Eilat) were targeted," without providing further details about the nature of the attack or its results.
No comments:
Post a Comment