Economist Mustafa Al-Faraj believes that the standards set by the crucial financial institution of Iraq for reforming the banking region are “strict and prohibitive” and unworkable below modern economic conditions.
Al-Faraj defined in an interview with “dinaropinions.com” that amongst these criteria is elevating capital to four hundred billion Iraqi dinars by way of the give up of 2025, a almost not possible goal given investor reluctance and the restrictions on greater than 43 nearby banks by the critical bank. The central bank also calls for the presence of a overseas strategic companion underneath strict conditions, a intention this is tough to obtain within the modern funding environment.
Al-Faraj points out that the principal bank has imposed 3 paths on banks, one in all which ought to be committed to earlier than August 31, 2025:
- continuing the condition of fulfilling the capital and overseas companion and bearing annual costs amounting to $2.four million for 4 years.
- Merging with local banks, with the identical preceding conditions, however at a fee of half of the yearly quantity for each bank.
three. final liquidation of the financial institution.
Al-Faraj delivered that these excessive monetary duties represent a extensive burden on banks, particularly given their requirement to hire approved international consulting firms to audit their operations, which will increase costs with none clean benefit. The standards additionally impose regulations at the ownership percent of related shareholders, no longer exceeding 10%, with the possibility of elevating it to twenty% by means of choice of the central financial institution, a complex count number given investor reluctance.
Al-Faraj warned that those standards could result in the liquidation of banks and undermine public self belief within the banking quarter, emphasizing that real reform must start with authentic help for banks that takes under consideration the local financial truth.
Al-Faraj proposed several answers to cope with the disaster, inclusive of:
- Rescheduling banks’ financial obligations in line with their modern-day circumstances.
- imparting economic and technical incentives to encourage investors to subscribe and aid the world.
- Amending the situations for the presence of a foreign strategic accomplice to be more bendy and suitable to the investment surroundings.
- related to financial institution representatives in formulating requirements to make sure their practical and transparent implementation.
•enhancing transparency concerning the function of consulting corporations and definitely defining the go back on their services.
•Adopting a flexible timetable that allows banks to conform to requirements with out the immediate risk of liquidation.
Al-Faraj stresses that reconsidering these requirements is an urgent necessity to preserve the steadiness of the banking sector and aid its crucial position in the countrywide financial system.
