Monday, 31 July 2017 (01:00 – GMT)
The Association of Iraqi Private Banks confirmed the importance of recent amendments to the Central Bank of Iraq Law for the banking sector, which is looking for more opportunities to contribute to the development of the national economy and enhance its role in the Iraqi capital market.
“The increase in the number of members of the Board of Directors of the Central Bank from outside the bank is an important step that will be positively reflected in the level of decisions taken by the bank,” said Wadih Nouri Al-Hanal, Of the 9 members, which means that there is a majority of outside the bank, which will push to benefit more than the support provided by the bank to banks in expanding their contribution to sustainable development and investment ».
He pointed out that «the latest amendments of the Central Bank reflected his desire to develop the sector’s work and mechanism of dealing with developments in the world, as well as addressing the problems related to the activity of financing and lending and lead to the simplification of procedures related to it».
He added that «the increase of the capital of the Central to one trillion dinars ($ 850 million) confirms the desire to activate its role on the level of investment of his funds and his intention to find large outlets in the acquisition of new products take into account the needs of investment and development sectors», adding that «the reality of private banks Needs a vision and strategy to help them touch the new reality that the sector aspires to communicate with the important objectives contained in the recent amendments to the Center ».
The International Monetary Fund has called on Iraq to make fundamental adjustments in its economic and financial sectors, especially the banking sector, which needs to restructure and new policies in line with the reforms called for by the Fund as a condition to support Iraq ».
The Council of Ministers and Representatives is working to introduce amendments to the Central Bank’s law aimed at increasing its capital and keeping abreast of the global economic development, granting powers to the bank, increasing the number of members of the Board of Directors from outside the bank and forming a committee to audit the interest on loans granted by the bank to commercial banks. Issued by judicial decisions.
The new law allows the bank to hold transactions on foreign assets and manage the official reserves of the foreign exchange of the State in accordance with international best practices and monetary policy objectives. The Council may also invest this reserve in gold and foreign currency and coins, which are usually used in performing international accounts held by the Central Bank Or for its account, credit balances payable on demand or short-term foreign exchange repayments, which are normally used to perform international accounts maintained by the Bank in its accounts or those invested through agreementsRepurchase, repurchase and fixed-term deposits.
The law also allows for the withdrawal of private funds available to the International Monetary Fund (IMF) account, the reserve position with the IMF, as well as any negotiable or fully trustable securities issued by foreign governments, central banks, international financial institutions, Which are paid in foreign currencies, which are normally used in the performance of international accounts held by the Central Bank of Iraq or for its own account.
The draft law allows the bank to “use derivatives in investment portfolios as a hedging tool, issue non-negotiable souvenir instruments and, with the approval of the Ministry of Finance, select an international company that performs external audit and auditing for a period of five years, .
The concerned circles expressed optimism about the next phase, especially with the intention of the «central» to develop its work by adopting new products. The Governor of the Central Ali al-Alaq stressed that «Iraq has exceeded the difficult stage during the past two years, which saw the issuance of data is not based on facts that raised terror in the Iraqi street, as shown by the Bank, which is a safety valve for the economy and monetary policy of the country, The dinar maintained a stable exchange rate at acceptable limits despite the challenges, in addition to the index raised the interest of global institutions supporting, as the central reserve exceeded the ceiling of the IMF’s expectations of ten billion dollars ».
A committee was formed by the Central Bank to develop and facilitate the work of the government sector with the private sector. It approved recommendations that would reduce the routine and ease lending conditions for private sector projects and adopt the advanced electronic systems in government banks to support the private sector to take its real role in economic development. . The recommendations approved the need to include the Ministry of Finance in the budget of 2018 all the receivables of contractors for payment, and approved the recommendation for the inclusion of private investment projects implemented or those in the stages of implementation as acceptable guarantees for loans investment projects exclusively, and approved the recommendation for the use of a modern mechanism for financing projects based on the schedule of work in The investment project is similar to the projects implemented in the interest of the state, according to the instructions of the Ministry of Planning, to reduce the pressure of guarantees on companies. The recommendations recognized the use of electronic systems in government banks to eliminate a large part of corruption and extortion, as well as reducing bureaucracy and red tape.