A Government Advisor Reveals A "Dangerous Paradox" In The Private Banking Sector.

Time: 2025/05/24 Read: 3,240 times  {Economic: Al Furat News} The Prime Minister's economic advisor, Mazhar Mohammed Salih, affirmed that restructuring the banking sector is a fundamental and important step toward enhancing the stability of the financial system and supporting economic development in Iraq.

Saleh explained in a press statement that this restructuring aims to better organize cash flow management and improve the efficiency of the state's financial liquidity, which will contribute to alleviating financial pressures on the public treasury. 

He pointed out that there is a clear division in the banking market, as private banks own more than 78% of capital, but contribute a limited percentage not exceeding 20% ​​of financing and deposit operations.

Saleh stressed that the banking restructuring is a comprehensive process that includes modernizing the infrastructure of government banks, enhancing the efficiency of asset and liability management, and developing governance systems in line with international standards.

He added that these measures will increase the banking sector's ability to effectively contribute to the gross domestic product, expand the scope of financing and lending for development projects, which supports economic growth and reduces dependence on oil revenues.

He emphasized that the current financial and monetary challenges, particularly oil price fluctuations and liquidity pressures, require accelerating the implementation of reforms, including increasing bank capital and modernizing operating mechanisms, to enhance the stability of the banking sector and improve the management of public financial resources.

At the beginning of this year, the Iraqi government announced plans to restructure state-owned banks, most notably Rafidain and Rashid Banks, with the aim of transforming them into more modern and efficient financial institutions capable of meeting the needs of the growing Iraqi economy.

In its session held on January 13, 2025, it also decided to establish a completely new bank based on the latest digital banking technologies, aiming to provide integrated banking services to individuals and companies, both inside and outside Iraq.

This new bank has been named "Rafidain First Bank" and will start with an initial capital of 500 billion Iraqi dinars (approximately $381.8 million), with the goal of reaching a final capital of one trillion Iraqi dinars (approximately $763.7 million). The state's contribution to this capital will be 28%.  LINK