By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund, for the London School of Economics (LSE) Middle East Centre.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Accounts that Didn’t Bark: Iraq’s Hidden State Balances

Iraq’s new prime minister, soon after being elected, wrote in an article to Iraqis that ‘when I assumed my duties, I found nothing but an almost empty treasury and an unenviable situation after 17 years of change.

The PM was referring to the accounts he would have been introduced to upon taking office – the Ministry of Finance’s (MoF) accounts with the Central Bank of Iraq (CBI), which at the end of May had net balances of 2.4 trillion (trn) Iraqi Dinars (IQD), made up of deposits of IQD 4.2 trn and debt of IQD 1.8 trn (see Figure 1).

Click here to read the full article.

KAPITA has compiled a study about the economic effects resulting from the COVID-19 Pandemic.

The research aims to provide insights and recommendations to tackle the challenges and opportunities that currently face the various segments of the Iraqi market. This will aid governmental organizations and authorities in devising effective policies to make a faster economic recovery.

Our team studied the magnitude of the current economic crisis resulting from plummeting oil prices and the preventive measures taken against the virus. The research surveyed over 500 people from various professional backgrounds such as public and private sector employees and business owners. Also the research includes insights from experts from a range of fields such as finance, economy, construction and business development.

The study discusses attitudes towards the financial situation and the extent of the impact on different sectors such as, Energy sector, Travel sector, E-commerce, Banking system etc.

Here are some key highlights from the study ‘Surviving the COVID-19 Crisis: Preliminary Findings of the Economic Impact on Iraq“:

  • More than 30% of respondents had their salaries cut-off and over 25% were laid off, stopped working or closed their businesses.
  • Over 27% of the respondents said that their savings would last between 2-4 weeks.
  • Public sector employees are considered to be in a better financial position while a heavier toll was inflicted on private sector employees.
  • Over 40% of employers believe that 1-3 months will be needed to recover from the crisis and 50% of employers believe that zero interest loans could help in a faster recovery.
  • 90% of e-commerce and delivery services were paralyzed due to the curfew imposed.
  • Around 70 private bank activities have been limited due to government debt, and shortage in liquidity affecting revenue, deposits, and profits.

KAPITA’s research team deeply thanks and appreciates its partners who majorly contributed to the completion of this study. We sincerely thank Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) for being an outstanding enabler for us, Iraqi Innovation Alliance (IIA) for their contribution in data collection and Iraq Business News (IBN) for being our media partner.

We would like to thank all the people who filled out the survey and contributed to the shaping of this study to highlight the impact of the COVID-19 crisis on Iraq’s economy.

KAPITA’s research team would like to express its deep gratitude to the interviewees for their help in making this research possible (The following order is the order of the interviews):

  1. Ammar Al-Khatib, Executive Director of The Station
  2. Anas Morshed, Economics Blogger & Business Development Consultant
  3. Mahmoud Al-Daghir, Former Director General of Financial Operations and Debt Management, Central Bank of Iraq (CBI)
  4. Samir Al-Nosery, Banking & Economics Consultant
  5. Tamara Hussein, Head of Traders at Rabee Securities
  6. Omar Salam, Secretary-General of Engineers Syndicate
  7. Abdul Ghani Al-Hassani, Financial Expert & Investment Manager at GroFin
  8. Ayser Jabbar, Media manager of the Central Bank of Iraq (CBI)
  9. Hyder Zahid, Financial Advisor at PMO
  10. Ali Sabeh, President of the Iraqi Federation of Industries
  11. Hamid Ridha, Owner and CEO of Royal Nuts Company.
  12. Mustafa Sirri, Business Environment and Policy Development Advisor in the PSD project of GIZ
  13. Zuhair Sabri, Secretary-General of the Iraqi Contractors Federation
  14. Ahmed Tabaqchali, Senior Fellow at the Institute of Regional and International Studies (IRIS)
  15. Alaa Jassim, Vice President of Earthlink

Please click here to download the full report.

By John Lee.

The Central Bank of Iraq (CBI) has announced that the repayment of loans obtained under its ‘1 and 5 trillion dinars’ finance initiatives for small and medium size businesses (SMEs) will be suspended for three months.

According to a statement from the Government of Iraq, the move is an attempt to ease the financial burden caused by coronavirus (COVID-19).

(Source: Government of Iraq)

The Iraqi Economists Network (IEN) has just published a new report from our Expert Blogger Dr Amer K. Hirmis:

Mudher M. Saleh’s testimony re: the appreciation of Iraqi Dinar in 2006-8, raises serious questions?

The purpose of this note is to shed light, and comment, on two views expressed recently in relation to the appreciation of the Iraq Dinar (IQD) in 2006-2008.

Muhammad Tawfiq Alawi (henceforth M. Alawi), former minister of communications in Iraq, gave a talk on December 13, 2019 in Washington D.C. to an Iraqi audience, in which he mentioned the appreciation of the Iraqi Dinar (IQD) during 2006-2008 as an example of lack of economic planning in Iraq.

Mudher Muhammad Saleh (henceforth M. Saleh), former deputy governor of the Central Bank of Iraq (CBI), and currently finance advisor to the outgoing prime minister, responded the following day, in an article published at the ‘Iraqi Economists Net.’

This note focuses on two observations, set out below:

Firstly, that the “independence” of the CBI was compromised in negotiating and signing a ‘Stand-By Agreement’ with the IMF in late 2005.

Secondly, by following the IMF programme in Iraq, the CBI’s administration focused its attention on limited instruments of monetary policy as dictated by the IMF, and much less on contributing to national economic growth and leveraging badly needed major structural changes in the economy.

Read Dr Hirmis’ full report here.

By John Lee.

Bahrain-listed United Gulf Holding (UGH) has received approval from the Central Bank of Iraq (CBI) to buy a 51.8 percent stake in Bank of Baghdad.

According to The National, the company will acquire the stake from Kuwait-based Burgan Bank.

The stock-market announcement can be found here.

(Sources: UGH, The National)

Iraqi government’s finance schemes to support SMEs and business innovation

To support small and medium private-sector projects, the Iraqi government, through the Central Bank of Iraq (CBI) and with the participation of a number of private and state-owned banks, has made available several types of loans.

The loans are available to all Iraqis.

According to a statement from the Iraqi Government, one of the more innovative finance schemes is the Central Bank’s “1 Trillion Dinars Initiative” which is dedicated to supporting small and medium enterprises, as part of the wider Iraqi government strategy to boost economic growth, create new job opportunities, and the production of local goods and services.

(Source: Iraqi Government)

By John Lee.

The Trump administration has reportedly threatened to block Iraq’s access to its funds in the Federal Reserve Bank of New York if Iraq expels US troops from the country.

The Wall Street Journal quoted unnamed Iraqi officials as saying that the US State Department warning came after the Iraqi parliament voted in favour of a resolution demanding the removal of American forces from Iraq.

Iraq uses the account to deposit its oil sale revenues and pay government salaries and contracts.

According to the most recent financial statement from the Central Bank of Iraq (CBI), the Federal Reserve held about $3 billion in overnight deposits at the end of 2018.

(Source: Wall Street Journal)

By John Lee.

Simon Hinrichsen, a PhD student at the London School of Economics (LSE), has published an analysis of Iraq’s sovereign debt over the years.

The full 51-page report can be downloaded here.

(Source: LSE)

The Iraq Britain Business Council (IBBC) is delighted to be holding a Tech forum within the main Conference at Address Hotel in Dubai on December 8th.

Principal among the speakers are Mr Yassin Bhija of GE Healthcare and Mr Uwe Bork of Siemens Healthcare who are driving the healthtech panel – exploring the hot topic of ‘How best to Develop primary and general healthcare in Iraq.’

Iraq has structural and tactical issues in providing universal healthcare at all levels of delivery and in all locations and classes. The two leading healthcare companies will discuss how tech solutions in general can address the issue and how their particular capabilities contribute to the general provision of healthcare.

Following on the Education Tech panel, will be discussing ‘The importance of Digital literacy in Iraq’, led by Google’s Mr Martin Roeke, Dr Victoria Lindsay of the British Council and Mr Timothy Fisher CEO of Stirling Education.

The Forum is sponsored by Innovest Middle East, an investment company that invests in startups during their scaling up stage in key markets in the Middle East region. With representations in Lebanon, Dubai, KSA, and Iraq, Innovest Middle East has played a key role in driving the startup ecosystem through direct investments as well as through supporting incubation and acceleration platforms collaboration with governmental and international bodies. In Iraq, Innovest Middle East launched IRAQPRENEURS in 2018, in collaboration with the World Bank, Central Bank of Iraq and leading private organizations, which grew to become one of the leading nationwide entrepreneurship empowerment platform in Iraq.

Mr Bassam Falah, CEO of Innovest will be addressing the delegates on the progress in support of the Iraqi start up ecology.

More speakers are expected to confirm.

For more information and to register, please contact

(Source: IBBC)

An Iranian private bank has been authorized by the Central Bank of Iraq (CBI) to open seven branches in the Arab country, an official said.

According to the Chairman of the Iranian Private Banks Institute, Koorosh Parvizian, the Iranian private bank has already opened two of the seven branches in Iraq.

He noted that opening of the new banks in the Arab country are part of plans to support Iran’s exports to the Iraqi market.

Every new branch of the Iranian private bank has a capital of $50 million, Parvizian added.

He further stressed that Iran’s private banks and credit institutions were prepared to provide financing for Iranian technical and engineering projects in Iraq.

In July, secretary-general of the Iran-Iraq Joint Chamber of Commerce pointed to the Arab country’s move to allocate $300 billion to its reconstruction, saying there were proper opportunities available for Iranian companies to take part in the process.

In March, Iran’s Minister of Industry, Mine and Trade Reza Rahmani said Tehran and Baghdad have agreed to reach the target of raising the value of annual trade exchange to $20 billion within two years.

Iran and Iraq enjoy cordial political, security and cultural ties but due to some internal and regional problems including Daesh (also known as ISIS or ISIL) terrorism in Iraq, they have not been able to increase their trade volume.

Iran’s main exports to the neighboring country include agro products, foodstuff and fruits such as watermelon, tomato and cucumber, which account for 37% of the total exports.

(Source: Tasnim, under Creative Commons licence)