World Bank report recommends the development of the financial sector in Iraq
13/01/2012
Baghdad - Hisham Abdul Wahab
Opinion of the Minister of Planning of the former Iraqi Mahdi Al-Hafiz, the study prepared by a group of World Bank experts on the financial situation in Iraq «comes at a sensitive time critical for the development of economic life in the country, and make a significant contribution to make the financial sector in all its pillars were an incentive to overcome the difficulties facing the economy ».
He stressed that the monetary value of this study is that it provides a good example of international aid to be developed and expanded in the future, which contain the important issues and events that should draw from it lessons for evaluation of the track's financial state.
He explained that the Iraqi government announced in February (February 2009) a comprehensive strategy to reform the financial and monetary, the most important strategy for reforming the banking sector for the period between 2008 and 2012 included two interrelated, and concentrated on modernizing the banking system in particular. And targeted promotion of its conclusion the main state-owned banks and modernize the regulatory framework complete. Although there is significant progress achieved in the path of fiscal and monetary, such as the restructuring of the Central Bank of Iraq and issuing a new currency and the expansion of the scope of the private banks, efforts remain to complete the task of reforming the sector dramatically.
The World Bank has issued an important report on this subject, at the request of an official from the Iraqi government, in order to stand a better understanding of the financial sector in Iraq. The report was presented by the Minister of Finance and the Governor of the Central Bank of Iraq. It is noted that the report prepared by a group of experts under the auspices of the World Bank Sahar Nasr, the Egyptian expert, focused on two main axes: Calendar reforms taken on the performance of the financial sector and Rsanth, and evaluate its contribution in raising the country's economic growth.
Dependence on oil
He pointed out that the Custodian report's recommendations focused on critical tasks can be reduced to reflect the effects of the banking system on the financial system in Iraq, with reference to the control of government banks most of the assets of the sector. The report pointed out that the economic and financial performance depends in great shape on the oil industry in the country, as the oil revenues constitute about two thirds of the GDP of the country.
The development of the financial sector that supports the growth of non-oil economic sectors in the country. The report noted directed private banks to develop their work, in order to secure the performance of advanced banking, but these efforts still need to promote and develop ongoing.
There are seven state banks dominate the banking sector, especially the Rafidain Bank and Rasheed Bank and Trade Bank of Iraq. It is noted that these banks have 86 percent of bank assets, in addition to 69 percent of the loans, either private banks are small and weak potential, and the fortieth number of banks.
The report called for the reform of State-owned banks, especially the Rafidain Bank and Rasheed Bank, and to the redistribution of the roles of government banks and private banks, including the «Trade Bank of Iraq», which was founded as a commercial specialist, but it works as a commercial bank in and play a significant role in the financial system.
Banks
Hafiz said that the report «stressed the need to reconsider the role of private banks, especially as it operates in the heterogeneous environment in relation to the government banks,» he said, adding that «there is a need to bridge the significant gaps in the development of these banks».
He said financial markets are concentrated in the financial markets of Iraq, a body is still small and undeveloped, and that they have full capacity to evolve in the future, and that the insurance sector is still limited, and subject to the domination of state institutions and non-covered control required, in addition to the structure infrastructure for the financial sector is still weak and an obstacle to clear funding.
He explained that the reform of the infrastructure of the banks to the required level, «The record shall contain the credit systems and the formulation of legal frameworks and accounting and auditing advanced», pointing out that small and medium-sized enterprises are the other non-well-developed. He noted that some studies indicate that about five percent of the informal economy enterprises secured bank loans.
He said taking the report's recommendations will make the financial sector more able to promote financial intermediation tasks and tasks related to the great support of national development and solve the problems existing in economic life, which requires great efforts and perseverance of the government and the competent authorities.