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12-01-2016 | (Voice of Iraq) - - Samir Abbas Alnasiri *:
after a year and four months to take over the new Iraqi government, headed by Dr. Haider Abadi, head of the Council of Ministers of the responsibility of the state administration in the light of our follow-up applications economic approach in the government program the decree of the government and approved by the House of Representatives and the specific his time of application of four years (2014 - 2018), a life of the government constitutionally. Through analysis axes and paragraphs of the government program and materials as far as the economic reform and banking reform in particular note the texts and paragraphs of the application, which referred to the program has not been implemented them anything through the expiration of the period above. As the time goes, Iraq is suffering from the economic and financial crisis suffocating for reasons both objective and subjective well-known, it requires the competent authority in the government and the Central Bank of the Iraqi government and the private banking sector of take immediate initiative to study the government program vocabulary and the requirements of its application on the ground through the diagnosis and analysis of the reality of the banking sector entities and the challenges it faces at this stage and to identify the processors to promote him and repaired in spite of all the circumstances, obstacles and difficulties experienced by, for example, in the light of the business to some of the big private banks Results Indicators as of 09.30.2015 compared with indices up to 30.9.2014 note what comes :
1. Total deposits declined at rates ranging between (13% - 59%)
2. Operating drop (cash credit + investments) between (13.5 -39%)
3. The money fell between their assets (5% - 74%)
4. Total Assets (Financial Centre) decreased between (9% - 43%)
5. The decreased earnings achieved between (16% - 43.5%)
and this confirms beyond any doubt that the sector Bank of Iraq and in particular the private banks are suffering from a real and catastrophic problems during this year and which increases Thread Atma is the sharp decline in stock prices of these banks ranging share price currently for most of the private banks in Iraq Stock Exchange between (250-500) fils except for some banks that no more than ten banks ranging shares between (600-900) fils including two of which exceeded the nominal share price of dinars and Ahdbnsabh simple and means that up to 40 banks amounting to the value of its shares declined by (50% - 75%) of the nominal value her. Since the banking sector is the ring core in a series of the Iraqi economy rings and the Iraqi economy, the problems are many and complex and there is a tangle and confusion between the mechanics and the requirements of building introductions transition to a market economy, according to Maahart him Article 25 of the Iraqi Constitution and the legislation and regulations, instructions, and the determinants of the central administration of the economy added to That lack of security and economic stability and financial mismanagement during the years (2003- 2015) and administrative corruption and financial institutions related to the economy. Which led to the creation of a true obstacles to attempts to banking reform.
Problems and constraints of the banking sector in 2016
and through the diagnostic and analytical view of what it will be the year for the development of macro economy in 2016 and the difficult economic conditions experienced by Iraq, we noticed that it could directly reflected in the financial sector and banking, making exacerbate the structural imbalance in the Iraqi economy does not work with him confront policies and instructions superficial and ineffective, but requires the development of strategic economic policies are interdependent on short and medium and long term, and this makes us identify the main problems and obstacles faced by the banking sector this year, as follows:
First: The special security conditions because of the war on terror and the occupation of some provinces of Daash terrorist gangs and theft of customers' deposits in the branches of government and private banks in those provinces and destroyed documents that guarantee owed banks rights of borrowers and which are currently classified according to the indicative list issued by the Central Bank's debt can not be repaid Realistically, because of the exodus of most of the borrowers of their provinces and their inability to payment in addition to an increased risk ratios in the cash grant credit to customers that disrupted the work of banks and reflected on the liquidity limits, which led it in some banks to a minimum, which some of them will be presented to the bankruptcy and financial collapse Add to that that will lead to influence on the economic situation and activity funding and investment during the current phase.
Second: the suffering of the Iraqi banking sector, particularly private banks in all areas of banking activity of militancy in the application of some of the instructions issued by the Central Bank of Iraq and the Finance Ministry and government banks (Rafidain and Rasheed), although he already issued several decisions of the Committee on Economic Affairs in the Council of Ministers overcome them and overcome them as contained Bamamha No. 64/4/2/2015 but to no avail due to poor follow-up of those responsible for implementation and these decisions Mayati:
(a) the Ministry of Finance obliging government departments all to accept certified instruments issued by private banks.
(b) The Central Bank of Iraq and the banks and government study the possibility of lending to private banks to finance small and medium enterprises because of their importance to the revitalization of the Iraqi private sector.
C- the Trade Bank of Iraq to open credit lines with private banks under the supervision of the bank Iraqi Central.
W emphasis on activating the role of the financial court as stipulated by the banks and in accordance with the law of the Law of the Central Bank of Iraq and not to resort to other courts.
(c) the Central Bank of Iraq to study the possibility of benefiting from the legal reserve for private banks to grant investment loans from the reserve and Beshravh.
h - Emphasis on the Ministry of Finance and the Central Bank of Iraqis applying for the Committee on Economic Affairs Resolution No. S.l / 495 on 11.18.2014 regarding the opening of letters of credit to the private banks up to $ 10 million (ten million dollars) without passing Iraqi bank for trade.
x - do all of the Rafidain and Rasheed deposit part of their money with private banks in exchange for soft benefits that the private banks to invest that money in investment projects in accordance with the economic feasibility and according to the mechanics of specific assurances studies
d by the Ministry of Finance and the Central Bank of Iraq and the Iraqi Trade Bank of the release of the amounts of appropriations According to the contexts in force globally and not suspended or delayed when backing receiving the items.
Z- urged private banks to create partnerships with international banks for the purpose of strengthening the developmental role of the country and create investment opportunities and the operation of labor.
Third, the continued absence of plans and strategies for rebuilding and restructuring of the Iraqi banking sector and weak foundations and detailed policies adopted by banks in the field of risk management in cases of natural situation and in emergency situations, although the World Bank's reports on the financial situation in Iraq and the stomach in conjunction with Iraqi officials diagnosed the challenges and processors since 2011 until last visit to their team to Iraq.
Fourth, the continuing weakness of the contribution credit granted to the gross domestic product, so that does not exceed 10%, while in regional countries (Middle East and North Africa, up to 55%), and this means that the impact of the Iraqi banking sector in economic development and rebuilding the national economy, according to a look serve the orientation of the market economy. And the lack of current liquidity of the banks will help in the continuation of this problem, which is not being able to cash the granting of credit to customers and investment projects in different economic sectors.
Fifth: the lack of financial institutions retaining the banking business as a guarantee deposits and corporate credit guarantee and the lack of specialized offices to study and analyze and identify risks (credit and liquidity, market and operating) in spite of the diagnosis of this several years ago.
Sixth: the inability of the Iraqi banking sector from acquiring the capabilities and potential and infrastructure substantive and technical influential in portfolio management and catch up in the footsteps of the banking development in the neighboring countries, making the customer look at our banks look backward and incapable to provide the best advanced services to him, which led to their reluctance to deal with the Iraqi banking sector, particularly private banks as that confidence has been shaken in the last period due to the inability of some banks to meet the withdrawals customers of their deposits, which led to a decline in deposit rates in most of the banks to a great extent which will affect the possibility of financing banks during this year.
Seventh: the existence of a parallel sector Unregistered represented Cashiers ARD who are big operations (internal remittances or external, banking, conversion of cash) takes place outside the formal framework and result in huge commissions under weak supervision or specific than creating a difficult environment for the banking system the government and private and has led to speculation in the foreign currency market, the impact on the central bank's policy of maintaining the Iraqi dinar exchange rate against foreign currencies from time to time that disrupted his plans in the supervision and management of the money market and to maintain balance.
Eighth: the complex tax laws and that does not fit with the support and economic reform policies that must be provided by the government for the banking sector with the existence of financial corruption and administrative evident in most economic institutions, including the taxation departments.
IX: limited development of financial systems in Iraq and the central policies in determining interest rates is reflected in the non-payment of loans and thus to restrict the ability of banks to finance new loans, which led to slow growth and the emergence of serious calls to restructure and reform the banking sector.
Tenth: general culture prevailing in the community and still look at private banks conservatively and avoid dealing instruments or Alaitmanieh cards In addition, the inability of some banks fulfill their obligations to customers, creating the body of lack of confidence in the banking sector and this is a big problem.
banking reform requirements in 2016
First: institutional and structural construction of the economy
reconsider institutional and structural building the Iraqi economy according to Mayati:
1. activation of economic reform law after the involvement of the private sector in management and supervision and draw public policies and strategies and detailed and contribute to the state in support, guidance and control of pre-emptive.
2. activation of the founding of the Supreme Council for Economic Affairs and the broad participation of private sector experts and technocrats, university professors and advisory offices and consulting firms
3. restructuring of State-owned banks and repair of private banks, according to the view reached by teams and experts of the World Bank and banking experts Iraqis and we signed a memorandum of understanding for this purpose several years ago have not been implemented so far.
Second, the lack of liquidity
by the central bank and Ministry of Finance analyzed the financial position of the banks as at 12.31.2015 and is expected for 2016 and determine the actual need for liquidity to sustain cash trading in the Iraqi market in all fields and to develop a proactive plan to prevent the bankruptcy and the collapse of some banks and sustaining banking wheel under the current circumstances and the use of mechanisms and tools for new applications monetary policy
Third, the implementation of the government program
to activate the implementation of the government program with respect to paragraph (d) of the axis Thirdly (encouraging a shift to the private sector) and private (development banking), which emphasizes the Mayati:
1. Implementation of investment funds social security policy.
2. activating the role of state banks and specialized banks and private banks to provide soft loans to the private sector and the national as well as finding solutions to the problems of taxes and accumulated interest Solutions resulting from the stalled projects for production owners.
3. Develop short- and medium-term fiscal policy.
4. coordination between fiscal policy and monetary policy as the foundation of economic policy and the development of mechanisms and principles for the implementation of it.
Fourth, the legislative environment
reconsider amending banking legislation in Iraq and the governing Labour banking for the advancement of reality banking and in particular the Central Bank Law No. (56) for the year 2004 and the Banking Law No. (94) for the year 2004 and the Law on Registration of Companies No. 21 of 1997 and the law of Iraq Stock Exchange No. 74 for the year 2004 and activate the Money Laundering Law and the Law on Investment new.
V. : structuring bank financing
that the current private bank financing mired with many failures and constraints and in order to increase the credit product and funding from private banks and activate their contribution to various aspects of investment and reconstruction and advancing the process of development and move the economic cycle in Iraq structural see as an essential step is serious is to activate expand the financing of small and medium-sized private enterprises target social and economic is a special priority and urgency and be the Central Bank of Iraq supervisory role and oversight effective at the take over development initiatives and activated, expansion and start its implementation and special fall 6 trillion for this activity dinars.
Sixth: financing and promotion of small and medium enterprises
development and promotion of the financing of small and medium enterprises in accordance with the methodology the following:
1. The activation of the government's role in building a strategy for the development of small and medium enterprises is the most important elements of success as the government that have the financial possibilities in a yield economy in which the private sector weakens to a large degree and can not promote this sector without having a plan for the development of this sector and building mechanics clear and declared the private sector to actively participate so that they can be turned from a small continued government sector into a major partner and then to the commander in investment and construction operations and is done through Mayati:
(a) to start converting the government sector of port projects and competitor to the private sector to monitor controls and facilitator procedures and laws.
2. the issuance of small and medium-sized companies law-sized and micro to help create new jobs and to reduce poverty and destitution and contribute to the economic and social development plans and to reduce high unemployment, which exceeded 25%.
establishment of the Independent National Commission for the building and the formulation of strategies, policies, systems, finance and lending to boost corporate profitability micro and small and medium-sized play this independent body to provide advice and studies to government departments on legislative, regulatory and financing measures to support this sector to be formed of representatives from concerned private sector ministries.
Seventh: CBI policies
activating and reconsider the instructions of the Executive and the guidance and regulations on the applications of monetary policy and the development of a proactive regulatory regime careful to follow up the implementation and in particular with regard to foreign exchange and Auctions currency overseen by the Central Bank of Iraq and the development of new mechanisms for external transfer and documentary credits and study the possibility of leaving the foreign currency auctions.
Eighth: Law guarantee deposits and credit
issuance of the Deposit Insurance Act, the credit guarantee and loans and the establishment of the concerned companies to this area.
IX: Basel
by the Iraqi Central Bank to activate the application of Basel (1.2, 3) follow up their implementation with banks and focus on risk management in which the application can be applied from the minimum capital requirements and the process of supervisory review and market discipline.
Tenth: classification of private banks
re-rating of private banks in accordance with the efficiency standards of performance and activity adoption of the approved international standards that we do the review and evaluation neutral accounting institutions accredited under the supervision of the Central Bank of Iraq.
Eleven: Technical gap
address the technical gap and secure the legal and technical requirements for twinning widespread among government banks and private banks on the one hand and between international banks on the other hand in order to develop the payments of the banking system, modernization and regulation of the financial and monetary trading processes according to the latest applied modern electronic banking systems in the world.
Twelve: banking merger
the central bank to prepare an analytical study to review the reality of private banks in the light of the financial results for 2015 and make decisions critical to integrate small banks in size and weak activity with large and discreet banks with a view to the development of the private banking sector.
to be a banking merger specific rules and means to address the problems and constraints of working in banks and not transfer their problems to other banks discreet.
(*) researcher and economist[/size] |
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