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Date: November 24, 2016
Private / NEN Iraq
Banking expert Samir Nasiri , "he said during his participation in the banking forum Iraqi Maqam in Beirut are currently held on 23 this November, the day before one of the 2016 Annual Arab Banking Conference in the paper that discussed Research papers banking" that the Iraqi banking sector is facing several years ago of the major challenges beyond his and since it is a ring core in a series of episodes of the Iraqi economy and the Iraqi economy , the problems are many and complex and there is a tangle and confusion between the mechanisms and requirements of building introductions transition to a market economy as referred to Article 25 of the Iraqi Constitution and the legislation and regulations, instructions and limitations department of the Central Economics Moreover, economic instability and the security situation , which passes it to create real obstacles in front of attempts to banking reform.
Iraq during the years since 2003 to the present time , causing However , the work of the Iraqi banking sector Bjھod subjective and under the supervision of the Central Bank of Iraq to do Bmھamh to provide its services to the public in accordance with the potential Almtahھ administratively, a bank and technically but was Msaھmth in economic development is limited due to face the challenges and problems and obstacles for reasons objective and subjective most notably falling oil prices and the economic crisis stifling Lھa suffered by Iraq and the war on terrorism and economic recession and low economic growth rate to less than 1% in 2015 and 2016 can be identified major challenges in the following section:
First topic: the challenges and problems and obstacles
The banking sector: look through diagnostic and analytical of what will be the general situation of the economy in the next five years and the conditions difficult economic experienced Bھa Iraq is currently noticed that it may be more directly reflected in the financial and banking sector, making the worsening imbalance Alھیkla in the Iraqi economy does not work with him Mwagھth policies and instructions superficial and effective, but requires the development of economic policies , coherent strategy on the short - term and medium - term and long - term , and this causes us to identify the main problems and obstacles faced by the banking sector, as follows:
First: that the security because of the special circumstances of the war on
Terrorism and the occupation of some provinces of Daesh gangs
Alarھabih and Sergtھa customer deposits in bank branches
And government eligibility in those provinces and destroying documents that guarantee owed banks the rights of borrowers, which are currently classified according to the indicative list issued by the Central Bank debt can not be repaid realistically because of the exodus of most of the borrowers of Mhafezatھm and not Tmcnھm of repayment as well as increasing the risk ratios in credit cash grant customers that disrupted the work of banks and reflected on the limits of liquidity than Oouselھa in some banks to their borders minimum , which will display some of which to bankruptcy and financial collapse in addition to that this will influence the stage Alraھnh.
Second: the suffering of the Iraqi banking sector and in particular
Eligibility banks in all areas of its activity from government banking militancy and weak support Lھa.
Although he had already issued several decisions of the Commission on Affairs of the economic cabinet attest to bind Actors of the concerned to provide support for banks eligibility as set Baamamھa No. 64 / at 4/2/2015 but to no avail because of poor follow - up of the Actors responsible for implementation and these Mayati decisions:
1 - the Ministry of Finance by requiring all state departments to accept certified instruments issued by private banks.
2 - The Central Bank of Iraq and the banks and government study the possibility of lending to private banks to finance projects of the Iraqi private sector small and medium enterprises to Lھa of importance to the revitalization of the sector.
3 - the Trade Bank of Iraq to open lines of credit to the private banks under the supervision of the Central Bank of Iraq.
4 - emphasis on activating the role of the Court of Finance as stipulated by the Banking Act and in accordance with the Law of the Central Bank of Iraq and not to resort to other courts.
5 - The Central Bank of Iraq to study the possibility to take advantage of investment of the reserve and Beshravh. Legal reserve for private banks to grant loans.
6 - emphasis on the Ministry of Finance and the Central Bank of Iraq by applying for the Economic Affairs Committee Resolution No. S.l / 495 on 18.11.2014 regarding the opening of letters of credit to the ($ 10 million) without Mrorھa Iraqi bank to trade.
7 - do all of the Rafidain and Rasheed deposit part of the eligibility Amwalھma banks in exchange for the benefits of concessional that the banks eligibility to invest that money in investment projects in accordance with the economic feasibility studies and according to specific mechanisms and guarantees.
8 - the Ministry of Finance and the Central Bank of Iraq and the Iraqi Trade Bank by firing amounts of appropriations according to the contexts receipt of applicable materials Bھa globally and not Talیqھa or Takیrھa.
9 - Eligibility urged banks to create partnerships with international banks for the purpose of enhancing its role of development of the country and create investment opportunities and the operation of labor.
Third , the continuing weakness of the contribution of credit extended to the gross domestic product , so as not to 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 the development and economic reconstruction of the national economy building according look serve orientation of the market economy . And the current lack of liquidity in banks helps the continuation of this problem Oھa Tmcnھa non - cash credit to customers and investment projects in different economic sectors to grant the contribution of monetary credit to the percentage of GDP (2003 -2014):
1.3 ........................ 2003
6.6 ........................ 2004
0.7 ........................ 2005
0.7 ........................ 2006
1.4 ........................ 2007
1.3 ........................ 2008
1.7 ........................ 2009
........................ 7 , 2011
8.7 ........................ 2013
10 ........................ 2014
Fourth , 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 (so for several years. Credit, liquidity, market and operational) in spite of the diagnosis of the defect.
Fifth: the inability of the Iraqi banking sector from acquiring the capabilities and potential and infrastructure substantive and technical influential in portfolio management and investment to catch up to the furtherance of the banking development in neighboring countries, making the customer look at our banks backward look and is not able to provide the best advanced services to him , which led to Azovھm deal with the Iraqi banking sector and in particular the eligibility of banks and that confidence has been shaken in the period , the last because of the inability of some banks to meet draws customers from their deposits , which led to a decline in deposit rates in most of the banks at rates Big , which will affect the ability of banks borrowing during this year.
Sixth: the existence of a parallel industry is not registered یmthelھ cashiers who are carrying out a large (remittances internal or external, banking, transferred cash) are outside the formal framework and arise Anھa huge commissions in light of weak or control specific, creating a difficult environment for device governmental and private banking and has led to speculation in the foreign currency market, the impact on the policy of the central bank to maintain 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.
Seventh: The complex tax laws that do not fit with the support policies and economic reform , which the government must Tkdmھa for the banking sector.
Eighth: debt incurred owed by customers ranged from not less than
35 billion dinars for each bank two years ago and could not
Astrjaaھa of banks which become debt
Not be possible obtained in accordance with the indicative list in addition to the
Banks and Ajھt major difficulties in implementing judicial decisions because of the threats faced by Lھa borrowers. In addition to the inability of banks
Retrieve their deposits with banks and banks in the territory
Kurdistan , for reasons related to the financial crisis afflicting of which
Ninth: The weakness Thaghzubain- some banks defaulted led to Qیamھm to withdraw their deposits from banks at higher rates than the rates the normal, non - filing of any new funds , which led to falling levels of liquidity in these banks to their borders minimum requirements of the Central Bank .mma make them can not to meet its obligations to customers, which create the body and lack of confidence in the banking sector and this is a big problem.
Tenth: deposits in these banks fell by 30-70%, forcing these banks to be stopped
Its activity credit and investment.
Atheist ten: Stop Some banks correspondent correspondent banks to deal with some of the banks, as happened with the German bank Commerzbank Commerzbank, which stopped its activity offshore banking (credits
Documentary and foreign remittances).
XII because of the economic recession in the country and the financial crisis suffocating stock prices fell in trading market in the Iraq Stock Exchange and the arrival of shares of these banks to less than the nominal share price by 85%.
XIII: Limited development of financial systems in Iraq
And central policies in determining the interest rate environment, which is reflected in the non - payment of loans and thus to limit the ability of banks to fund new loans, which led to slow growth and the emergence of the seriousness of calls to re - ھیklھ and reform of the banking sector.
XIV: general culture prevailing in the society, which is still considered to own discretely banks and avoids dealing instruments or Alaitmanییh cards In addition, non cousin managed Baed banks can fulfill its obligations towards Zubayn which led to destabilize Althagھ banks eligibility of the banking and financial inclusion.
The second topic: the strategy of reform proposals
CBI launched its strategy for the years 2016 - 2020 in conjunction with calls for change and comprehensive Jawھra issued by the Prime Minister and the Council of Representatives and the political blocs to form a new government of technocrats disagree Bojھat everyone looked different from the specifications and competencies minister Almarjoییn. Which یھmna Kmokhtsیn economic affairs and banking is what are the new mechanisms and policies that can یatmdھa central bank, banks and government and private Actors relevant in terms of banking reform in accordance with the curriculum change Jawھra desired for the economy for the first episode and core it.
The strategy of the central bank has identified and painted the way
Reform banking, according to the following key objectives:
1 -support and achieving financial stability.
2 Activating the role of financial institutions and the banking sector.
3 Develop infrastruc- regulatory and organizational Alھیkl.
4. Develop human capital.
5 Activating and integration of internal and external relations.
Since these strategic objectives have been identified time period their applications to five years to achieve 23 a target sub derived of which is based on the achievement of financial stability and the stability of the financial system and uncles financial inclusion and access to institutional reform and ھیkla banking sector in Iraq, but by analyzing the mechanisms and points of action to achieve goals above note that the strategy has set clear priorities to achieve reform and certainly that these priorities have been Tchkیsھa in light of the challenges faced by the banking sector due to the economic crisis and the financial stranglehold that suffers of which Iraq is currently the subjective and objective reasons displayed and no need of re - Zkrھa.
Where they can diagnose the priorities of the suffering of the banking sector, which requires the Iraqi Central Bank and government Actors related to the design and development of mechanisms and procedures for processed during 2016 and not to wait for five years to come Oھa as follows:
1 -oaaadh the trust of citizens and customers in the banking sector
Iraqi and in particular eligibility banks.
2 - Work to increase the proportion of savings banks in proportion to
Compactness outside where banks amounted to savings ratio of 23%
Compactness and the proportion of 77%.
3 -acetkmal pillars Alھیklیh and Technical Supervision proactive.
4 -tosیs institutions and issuing laws guarantee deposits
5 -Review and evaluate the results of the work of banks and reclassified by international companies supported. And identifying vulnerable banks and its activity Hamaیtھa bankruptcy that you need to enter the Iraqi Central Bank.
6 Assist and support the banks , which have been hurt in
The provinces that their income Daesh.
7 Strengthening the central bank initiatives in financing projects
Small, medium and what contributes to the revitalization of session
Economic diversification and the general budget resources for that purpose and to make the change Jawھra approach to banking reform and financial inclusion as stated strategy and insight into the priorities and challenges faced by the Iraqi banking sector of which suggest that the implementation and application of visions and ideas of the following:
First , the institutional structure of the economy and Alھیkla:
Reconsider the institutional construction and Alھیkla Iraqi economy
According to Tatiana:
1 Activating the economic reform law after the involvement of sector
Special riparian management and supervision and policy - making
And strategies and detailed proposals and contribute to the state in support, guidance and Proactive control.
2 Activating the establishment of the Supreme Council for Economic Affairs and the wide participation of private sector experts and technocrats, university professors, offices and advisory consulting firms.
3 - restructure State - owned banks and reform of banks
According own view reached by Alیھa teams and experts of the World Bank and banking experts Iraqis and which has since been signed by a ball of understanding to this regard several years ago have not been implemented so far.
Second , the central bank study and analyze the reality that
Taیhھ banks and government eligibility by reviewing
The assessment and classification of these banks according to their data the financial and the results of its business for 2015 and the adoption of an evaluation indicators and clear and based on an influential banking law and international standards camels Portal commissioned a working group that specializes in financial analysis and Thdیdamaaییr efficient performance of the banks in all areas of banking administrative and banking and credit and prefer to have this Working internationally independent and neutral , taking into account the results of the evaluation system of the US for the years 2013-2016.
Third: Proactive control
The Central Bank of Iraq full control and supervision of the banking movement in Iraq by focusing on proactive monitoring of electronic office and field and a programmer and the outline and identify irregularities and Alھfouat and excesses of the executive management of banking and take corrective action.
IV controls nomination banking leaders
The application of the Council of the Iraqi Central Bank decision on the administration controls the nominations to the Board of Directors and staff in leading banks and a focus on efficiency and expertise Almھnیھ specialist.
Fifth - ھیklh banking sector
ھیklh government banks and work to _khas_khastھa according to the memorandum signed with the World Bank with a focus on its contribution with some discreet banks in the private banking sector , and by no more than 25% on that run these banks with the mentality of the market economy and subject to the supervision of the Office oversight and take deliberate steps to establish a development bank and investment involved a capital of the state by no more than about 25% , and is managed by the private banking sector and the state will undertake the guidance and supervision of the accounts are subject to audit and monitor the BSA.
VI Central monetary policy
Central Bank of Iraq to reconsider its policy for control of monetary policy, specifically Alیatھa and Osailھa concerning the maintenance on the dinar of the Iraqi exchange rate against foreign currencies and are secure Dinar Iraqi Ministry of Finance and increase the proportion of dollar sales style documentary credits instead of money orders of Foreign Affairs.
Seventh: address the lack of liquidity
The central bank and finance ministry analyzed the financial position of some banks to fulfill their obligations towards customers, creating the body of lack of confidence in the banking sector and this is a big problem for banks as at 31.12.2016 and is expected for 2017 and determine the need for actual liquidity to sustain cash trading in the Iraqi market in all fields and put proactive plan to prevent the bankruptcy and the collapse of some banks and the perpetuation of the banking business in the envelope Alraھn wheel.
Eighth: The legislative environment
Reconsider changes in legislation banking in Iraq, which regulates the banking work for the advancement of reality banking and in particular the Central Bank Law No. (56 of 2004) and the Banking Law No. (94 of 2004) and the law of company registration number 21 for the year 1997 and the law of Iraq Stock Exchange No. 74 2004 and activate the money laundering law and the law of the new investment.
Ninth: ھیklh bank financing
The ھیklیh bank financing private Alraھn Taatarیھ many failures, constraints and in order to increase the credit product and funding from private banks and activation of its contribution in the various aspects of investment and reconstruction and push the development process and move the economic cycle in Iraq see as an essential step Avenue is activated maximize project finance for small and medium - sized target social and economic a special priority and urgent and that the Iraqi Central Bank supervisory and regulatory role effectively so that develops initiatives and Tfیlھa and Tosیaھa and start Ptnfیzھa and special allocation of 5.6 trillion dinars for this activity.
Tenth: funding and encourage SMEs
Development and promotion of microfinance and medium according to the following methodology:
1 Shall activating the role of government in building a strategy to develop SMEs is the most important elements of success as the government are that have the financial means to yield weakens Vیھ economy the private sector to a large extent and can not be advancement Bھma sector without having a plan for the development of this sector and the building and clear mechanisms and undeclared where the private sector participate actively so that it can be transformed from a small vassal sector investment and government construction primarily a partner and then a leader in investment operations and construction.
2 Begin transferred from the public sector port projects and competitor laws for the private sector to monitor controls and facilitator of the action.
3-issuance of small and medium sized companies law
And lo and to help create new jobs and to reduce poverty and destitution and contribute to the economic development and social plans and to reduce the high unemployment rate , which exceeded 28%.
Eleven: guarantee deposits and credit institutions
The issuance of the Deposit Insurance Act, the credit guarantee
And loans and the establishment of the respective companies to this area and Mbachertھa act in accordance with the decision of the Council of Ministers issued Bھma regard.
The Central Bank of Iraq to activate the application of Basel (1.2, 3) follow - up implemented with banks and focus on risk management, where an application can be applied to reduce and discipline of the minimum market capital requirements and the process of supervisory review.
Thirteen: technical gap
Address technical gap and secure the legal and technical requirements for twinning widespread among government banks and private banks on the one hand and between global banks and the other hand with the aim of developing the banking payments system, modernization and regulation of the financial and monetary trading where according to the latest banking systems modern electronic applied in the countries of the world.
Samir Abbas Alnasiri
Member of the World Union of Arab Bankers
Member of the Forum of Baghdad Economic Advisory Council
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