Iraq Information Update
December 03, 2016
Things in Iraq are going as well as can expected in light of the happenings there. All considering that the Iraqi government has been at war with the Islamic State of Iraq and the Levant (ISIL) since June 2014. Things appear to be looking up for Iraq as the Iraqi Security Forces (ISF) have surrounded the city of Mosul and are currently cutting off all escape routes for the ISIL terrorists. The Iraq Counter-Terrorism Forces (CTF), (or better known as the Golden Division) are continuing on with their fight with the ISIL terrorist in Mosul. They have advanced into three Mosul neighborhoods. The Iraqi security Forces (ISF) have almost secured the Mosul-Kirkuk highway as ISIL has been using this stretch of road as an escape route. ISF will soon secure the highway and transport materials to Mosul to help in the war effort. The ISF is now in control of seven neighborhoods southeast of Mosul in the Muharabin and Intisar areas. The ISF is still continuing to be attacked by ISIL snipers that are camouflaged along the highways and buildings. According to an ISF commander, ISIL still has the ability to manufacture car bombs and send them to attack Iraqi army bases. On Saturday, (Nov 26) ISIL launched eight car bombs against Iraqi army bases.
Economy in Iraq
In Iraq, the private banking system continues to work at minimum modern day banking standards. The banking system is underdeveloped and is a cash based system the majority of the time. Very few banks issue bank credit cards, wire money, issue loans and/or make deposits. Commercial lending has risen to higher levels, however not to a level that brings confidence to the local Iraqi wanting to start a business. Not to mention, there continues to be too many restrictive conditions that make it difficult for the average Iraqi to obtain a bank loan. Most loans currently given in Iraq are negotiated within or by family members and close friends, and most are like $10,000 or less.
As far as the private banks go, they are loaning higher amounts however the borrower must have collateral and the only collateral that a bank will accept is land. It is the reason Iraq banks in Iraq are the largest land owners. They really should consider going into the real estate business. Banks in Iraq are making their profits by small loans with collateral which would be land and money transfers. Western Union is available in Iraq for money transfers however, the fees are higher than if you walked into a private Iraq bank. The Iraq state banks do not transfer money for citizens only for government business only.
The Iraq Central Bank (CBI) has decided to continue with the delete the zeros project or better known in the financial circles in Baghdad as the redenomination of the Iraqi dinar currency. Meetings and conferences are usually held in Baghdad or in areas where the ISIL terrorist group are not. The CBI has started printing the 50,000 (50k) Iraqi dinar currency banknote and will print the 100,000 (100k) Iraqi dinar currency banknote shortly thereafter. The printing of the 100k has not yet started, and talks continue on about printing a 200k banknote. You may also find it surprising that the low denominations currently in circulation will be removed from Iraq. That announcement is expected to come later in the year. Iraq government officials would like to see the country increase the oil production before any serious work on the Iraqi currency is completed. The redenomination is the start of the successful macroeconomic stabilization and will not alter the value of the Iraqi dinar currency. Currently, the economy has not stabilized itself enough as prior to June 2014, when terrorists moved with speed in northern Iraq. Several years ago, the Central Bank shut down all economic ties to the Iraq cities of Erbil and Sulymaniah in northern Iraq. It was done because the Kurdistan government wanted full control of its finances without any kind of oversight from the CBI. Hopefully, within time, the CBI and the Kurdistan government will open the Erbil CBI branch and get their banking activity Kickstarted once again. 
The Central Bank of Iraq
The Financial Advisor to Iraq, Prime Minister, Mohammed Saleh has recently said that there is a legitimate concern for bankruptcy because of an increase in the government pensions since 2003. The Iraqi government applied for a loan from the IMF (International Monetary Fund) and the loan came with stipulations. For one, the IMF would like the Iraqi government to reduce the salaries paid to retired government employees. The IMF has not stated what the ramifications would be if the Government of Iraq did not comply with these terms.
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