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[size=47]Iraqi banks are in crisis: structural imbalance, double taxation and deep corruption[/size]
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Inside the Central Bank of Iraq in Baghdad, March 25, 2024 (Mohammed al-Rubaie/AFP)
Inside the Central Bank of Iraq in Baghdad, March 25, 2024 (Mohammed al-Rubaie/AFP)
Iraqi banks suffer from many problems related to their [You must be registered and logged in to see this link.] structure , and face widespread crises and risks due to the largely unstable monetary and investment environment, which prompted the US Treasury to monitor a number of private banks and ban many of them, while corruption that is deeply rooted in the economy poses an ongoing challenge to the sector.
Iraq has eight government [You must be registered and logged in to see this link.] , and the structure of the Iraqi private banking sector consists of 32 Islamic banks and 28 commercial banks. Samir Al-Nusairi, advisor to the Iraqi Private Banks Association, told Al-Araby Al-Jadeed: “The number of private bank branches is around 500 branches inside and outside Iraq, and they have expanded and developed technically according to modern electronic banking systems.”
Al-Nusairi pointed out that the [You must be registered and logged in to see this link.] banking sector in Iraq faces operational challenges, most notably the US sanctions imposed on 32 banks, preventing them from using the US dollar in banking transactions, which affected their local and international activities and harmed the national economy.
He pointed out that the most important obstacles facing banks currently are technical, financial and administrative in the procedures and instructions for digital transformation, which requires providing full support for this transformation process and using electronic payment tools in government, mixed and private institutions, and setting a time frame for the complete transition from the use of paper money to electronic payment.
He added that the private banking sector suffers from the differentiation between it and the government banking sector, and also suffers from weak activity and low liquidity, deposits, revenues and profitability in most banks, especially the 32 banks against which sanctions were issued, in addition to the decline in the shares of most banks in the trading market in the Iraq Stock Exchange.
Al-Nusairi stressed the necessity for the Iraqi Council of Ministers to resolve the issue in the region and put an end to double taxation, and for tax collection to be centralized according to the law and for the audited final accounts submitted to the General Tax Authority to be adopted as a basis for tax accounting.
[You must be registered and logged in to see this link.]
Iraq has eight government [You must be registered and logged in to see this link.] , and the structure of the Iraqi private banking sector consists of 32 Islamic banks and 28 commercial banks. Samir Al-Nusairi, advisor to the Iraqi Private Banks Association, told Al-Araby Al-Jadeed: “The number of private bank branches is around 500 branches inside and outside Iraq, and they have expanded and developed technically according to modern electronic banking systems.”
Al-Nusairi pointed out that the [You must be registered and logged in to see this link.] banking sector in Iraq faces operational challenges, most notably the US sanctions imposed on 32 banks, preventing them from using the US dollar in banking transactions, which affected their local and international activities and harmed the national economy.
He pointed out that the most important obstacles facing banks currently are technical, financial and administrative in the procedures and instructions for digital transformation, which requires providing full support for this transformation process and using electronic payment tools in government, mixed and private institutions, and setting a time frame for the complete transition from the use of paper money to electronic payment.
He added that the private banking sector suffers from the differentiation between it and the government banking sector, and also suffers from weak activity and low liquidity, deposits, revenues and profitability in most banks, especially the 32 banks against which sanctions were issued, in addition to the decline in the shares of most banks in the trading market in the Iraq Stock Exchange.
Iraqi banking crises
Al-Nusairi stated that private banks also suffer from double taxation, as the Tax Department in the Kurdistan Region of Iraq, for example, imposes on the branches of private banks in the region (their number exceeds 70 branches) to pay the annual tax, while these banks, according to the current Federal Tax Authority Law, pay the same tax centrally in Baghdad.Al-Nusairi stressed the necessity for the Iraqi Council of Ministers to resolve the issue in the region and put an end to double taxation, and for tax collection to be centralized according to the law and for the audited final accounts submitted to the General Tax Authority to be adopted as a basis for tax accounting.
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