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On the occasion of the year 2020, given the special and new circumstances that our beloved country is going through due to the broad popular movement, legitimate demands for change, political and economic reform, confusion of visions and differing opinions on the reality and activity of our banks at the present time and the effects of events and lack of Stability in the working environment and because our banks are the first core link in the national economy we must clarify by analyzing and evaluating the business results of the banks 2018 and 2019 and the financial indicators that confirm that they have faced many challenges and business constraints and we will try in this paper to address them according to the data Our view of exceeding the requirements for 2020 in order to achieve stability and sustainability of banking in accordance with the central bank's strategy and monetary policy applications and to maintain the results of the work achieved even minimal if the current circumstances continue.
The structure of iraq's banking system
The structure of the banking system currently consists of 7 government banks, 76 commercial and Islamic banks, 25 commercials, 27 Islamists and 17 branches of a foreign bank.
The challenges and constraints of banking
First, based on official financial statements and indicators issued by the Central Bank for 2018, the banking sector suffers from weak banking activity, low liquidity, deposits, revenues and profitability in some banks, particularly private banks, in large proportions compared to previous years, and their share prices on the Iraqi Stock Exchange have also fallen due to the economic and financial crisis and economic recession that Iraq has suffered for known reasons.
Secondly, the total deposits of private banks amounted to 14% of the total deposits in the Iraqi banking sector with government banks at 86%, although the number of government banks is 7 and the private 69 commercial and Islamic banks, due to the concentration of deposits and government accounts with government banks.
Third, private banks invest 78% of the capital of the Iraqi banking sector, but only 22% of the sector's assets and 13% of profits.
Fourthly, the outstanding debt, which cannot be collected, amounted to 6 trillion dinars, which constitutes 15% of the total bank financing granted, and banks face significant obstacles in collecting them for judicial, legal and tribal reasons.
Fifth, the decisions of the Council of Ministers and the Economic Affairs Committee of the Council of Ministers on government support for private banks issued during the previous three years have not been activated and implemented.
Sixth, private banks are unable to employ excess liquidity in loans and financing for projects with a 15% credit balance.
First, raise the ceiling for bank financing in the Central Bank's Initiative for Small and Medium Enterprises and allow private banks to read investment projects of various types of real estate, housing, industrial and other types, allocating funds from the Central Bank's initiative to specialized government banks and ceilings covering the loan rates required by contractors and investors dealing with banks.
The Government has made the necessary legal adjustments to make private bank debt an excellent debt to be repaid, as is government debt.
Third, the Central Bank and the government are asking the United Nations Development Programme and Arab and international funds to work with Iraqi banks to produce financing programs for large-scale investment projects to attract foreign investors while granting them facilitation and incentive in accordance with Cabinet Resolution 254 for 2019.
Fourth, the Central Bank takes the necessary steps to mandate global audit and rating companies to classify private banks as sober, because without a bank rating, it is not possible to partner with close global banks for the purpose of financing large projects or consider Iraq's credit rating to be an approved rating of sober banks.
Fifth, because of the occupation of Mosul, Anbar and Salah al-Din by ISIS terrorist gangs, the 121 government and private banks have suffered damage and losses of 1 trillion dinars, and a large part of them are shareholders' funds and deposits to customers that the government requires to compensate.
6- Activating all cabinet decisions to support the banking sector, support reconstruction and investment issued in 2019 and previous years and the decisions of the Economic Affairs Committee to support private banks, in particular the following:
1• The Ministry of Finance and government banks are required to open bank accounts to ministries and state departments in private banks and not to restrict them to government banks under its book 207 on 31 January 2019.
2• Activating the decision to allow ministries and government departments to open documentary credits in private banks up to $50 million without going through the Ministry of Finance and the Iraqi Bank of Commerce. Economic Affairs Committee Resolution 967 dated 21/10/2018.
3• Activating the Decision of the Economic Affairs Committee No. 253 for 2015 regarding the acceptance of sukuk approved by private banks to pay insurance, customs duties and taxes.
4• Activating Cabinet Resolution 245 for 2019 on the promotion of reconstruction and investment.
5• Activating the Cabinet Resolution No. 378 for 2018 on the collection of government fees in state departments through electronic payment.
6• Activating the decision of the Economic Affairs Committee No. 272 on 19/5/2015 to support private banks, particularly in relation to their approval by government banks.
7• Activating cabinet resolutions No. 313 for 2016 and 218 for 2017 on the localization of employees' salaries and asking government departments to settle their salaries according to their wishes and not directing them to settle salaries in government banks exclusively.
8• Activating the decision of the Economic Affairs Committee No. 253 on 3/5/2015 to accept the approved instruments of private banks to collect government taxes and customs duties.
Seventh, the Ministry of Finance will compensate banks that have been damaged by the occupation of the provinces by ISIS terrorist gangs. She's under arrest at the Central Bank.
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