Banks in Iraqi Kurdistan out of cash
Banks in Iraqi Kurdistan out of cash
04 Jan 2014
Locals in Iraqi Kurdistan have found that they are unable to withdraw cash from their accounts. This is a prominent problem though for the locals that happens every year at this point of time. The liquidity of money has been sole responsible for this. On the other hand, some of the financial analysts suspect that a plot and locals have started keeping their cash under the bed.
Nawzat Qader is standing helplessly in front of a bank in the city of Sulaymaniyah, in the semi-autonomous region of Iraqi Kurdistan. He had wanted to withdraw a small amount of money, so that he could cover his family’s needs over the New Year period. He had deposited IQD 800,000 a few weeks ago (around US$500) but when he went to the bank to withdraw it, he was told that the bank had no cash and that he would have to wait.
Qader complained, “How is it that I go to my bank to withdraw money that I know I have but I must return home empty handed? How can we trust our banks when things like this happen?”
Every year toward the end of the fiscal year the problems become more obvious; it’s also led to delays in salary pay outs for government employees.
“Banks here don’t function the way modern banks do,” says Ali Hama Salih, formerly host of a TV show that uncovered corruption who’s now a politician for the anti-corruption Change movement. “The banking system here has failed.”
“People have lost confidence in the banking system because of these crises in liquidity,” agrees Hawar Sheikh Raouf, of Iraq’s Mansour Bank, which is half owned by the Qatar National Bank; the latter is regarded as one of the Middle East’s safest. “The poor services offered by some of these banks don’t help either.”
Mr. Raouf also believes that local authorities should take some of the blame. They haven’t tried to support a stable financial system nor have they tried to do anything about this recurring problem of liquidity.
“The solution is not that difficult,” Raouf says. “But local authorities don’t seem to understand how much of a problem this is and how much suffering it causes.”
Meanwhile Mohammed Raouf, a professor of economics at the University of Sulaymaniyah, believes the crisis may have been created deliberately. “Iraq’s Central Bank specifies how much cash a bank must have in reserve, in order to carry out its daily business,” Raouf explains. “If the bank doesn’t have enough cash in reserve, then it is, to all intents and purposes, bankrupt. I believe that those in power are holding the cash up somewhere along the way so they can retain their control on it.”
Minister of finance of Iraqi autonomous Kurdistan, Baez Talabani, announced that local banks don’t have enough cash because Baghdad isn’t sending as much hard currency as it should.
Despite efforts by both the banks and various investment houses to try and shore up confidence in monetary institutions in Iraqi Kurdistan, nothing really seems to have helped: a lot of locals still prefer to keep their money at home.
Fattah Nouri is one of these. The 60-year-old recently sold some land he inherited but instead of going to a bank, he’s keeping the money safe at home. “I’m planning to buy some more property and I’m afraid that when the time comes the bank will just tell me they don’t have the cash,” he explains. “And if that happens I might lose the opportunity to buy the property I want. I know it’s risky but I’d rather keep the money at home than in a bank.
iraqdirectory.com
