Iraqi banks acquire 99% of government bonds

Iraqi banks acquire 99% of government bonds

Monday 4 October 2021 | 12:30 PM

Central Bank of IraqOn Monday, a government source said that most of the bonds offered by the government are bought by banks through their cash reserves with the Central Bank of Iraq, while citizens are satisfied with only one percent of those bonds .

From time to time, the Central Bank issues bonds in favor of the Ministry of Finance, for the purpose of financing some public expenditures, as it recently issued construction bonds in denominations of 500 thousand dinars and one million dinars .

The source said, “The banks use the compulsory cash reserve at the bank, which ranges between 35-40% of its capital of 250 billion dinars, for the purpose of buying the bonds offered by the government through the central bank .”

The source added, “99% of these bonds are bought by banks and one percent is bought by the citizen,” noting that “buying bonds by banks achieves great profits for them through the high interest offered, and the amounts that banks buy for these bonds are frozen with the bank as a reserve. You will move it by buying these bonds .”

The source noted, “The government issues bonds from time to time due to its lack of financial liquidity to finance public expenditures,” noting that “the government owes the Central Bank more than 21 trillion dinars as a result of borrowing funds during the last period to cover employee salaries and other expenses.”