Banking sector update
Banking sector update
04/15/2025
Iraq has recently witnessed significant improvements on the political, economic, and security fronts, which has had a positive impact on attracting foreign and Arab investments, particularly in the banking sector.
The increasing presence of foreign and Arab banks in the country is evidence of a recovering investment environment and reflects government efforts to enhance economic stability.
Among the most notable positive indicators that have contributed to strengthening the investment environment are regional and international cooperation and Iraq’s openness to Arab and international countries. This has boosted investor confidence and encouraged Arab banks to expand their presence in Iraq, which is relied upon to provide advanced financial services, such as trade finance and Islamic banking, in addition to supporting the private sector and joint investments.
This step represents the optimal means for global integration through the entry of international banks, reflecting the return of investor confidence in the Iraqi economy.
Meanwhile, the Iraqi banking reform process, undertaken by the government to address the challenges facing the banking sector and keep pace with the digital age and international requirements, is proceeding along two parallel tracks. The first involves reforming private banks, led by the Central Bank, and ensuring compliance with international standards and the implementation of anti-money laundering and counter-terrorism financing requirements. This includes lifting the ban on dealing with Iraqi banks and cooperating with international companies to develop the technical infrastructure.
The second path is being adopted by the government to modernize state-owned banks, with support from the executive branch. This involves improving efficiency and adopting modern banking systems to reduce corruption, increase transparency, integrate with the private sector, and encourage partnerships between banks.
It’s worth noting that there are obstacles hindering banking development, including bureaucracy, legal complexities, weak digital infrastructure in some local banks, and the need for qualified human resources to manage modern financial systems. This goal aims to create a modern banking system that supports the national economy. However, complete success requires accelerating reforms to ensure compliance with international standards, transforming Iraq into an attractive financial center that contributes to economic diversification and the creation of new job opportunities, thus strengthening its regional and international standing.
In any case, there is no alternative but to integrate with the global financial and banking climate, after comprehensive reform is completed, with the aim of creating a unified national banking market, directing banking credit towards investment, driven by the promising economic stability our country enjoys.
alsabaah.iq
