2020/12/03 13:30 Readings 934 Section: File and Analysis
Iraqi money is leaking abroad ... the citizen does not trust local banks ... Corruption points prefer funds in neighboring countries
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Baghdad / Al-Masala: Businessmen in Iraq suffer from weak banking systems, which leads them to resort to banks in neighboring countries in their international commercial dealings, while many citizens do not trust them and save their money in their homes.
And economic expert Abbas Anid Ghanem says that the Iraqi banking systems are now far from international standards, according to France Press.
According to Ghanem, the problems go back decades, and specifically to the 1990s, when sanctions imposed on Saddam Hussein's regime isolated Iraq from the world, and after the entry of the US-led coalition forces in the country in 2003, the widespread looting led to the emptying of liquidity of banks.
More than 70 banks have been established since then, but the sector as a whole has not developed, and the World Bank reported in 2018 that the three largest banks, namely Rafidain, Rasheed and Al-Iraqiya for state-owned trade, account for about 90 percent of the sector's assets.
On the other hand, financial experts explain to the obelisk that the personalities and parties involved in corruption prefer assets in neighboring countries,
and in this way billions of dollars fled Iraq in the year 2003, where the plunderer of Iraqi money prefers to invest abroad rather than domestically,
thus Iraq lost its public money and investment opportunities on Both.
The three public banks mainly pay the salaries of eight million Iraqi employees, but the state was forced to borrow from them following the collapse in oil prices this year, which raised its domestic debt.
For the director of the Al-Akhyyar Contracting Group, Adel Al-Salhi, the problem with public banks is that they are satisfied with loans to the state and pay the salaries of employees and are not interested in dealing with the trade sector and supporting businessmen.
This applies especially to the Rafidain and Rasheed banks, and to a lesser extent to the Iraqi Trade Bank, which was established by the US Coalition Provisional Authority under the supervision of the civil governor Paul Bremer in 2003,
but Ghanem explains that sectarian and partisan quotas in the political system and administrative and financial corruption are matters that affected this banking institution, which limited its role. Almost in government lending.
Although the Iraqi Trade Bank is the only one that enables merchants to open credits, it does not provide any banking facilities to businessmen, and asks them for guarantees with a very high value of up to 110 percent to provide a letter of guarantee only, according to Al-Salhi.
This prompted the group of good guys for contracting to resort to banking services outside the country, like many companies that have come to rely on banks in Jordan, Turkey, Lebanon or even Iran to facilitate their dealings.
The issue is not only about financial facilities, but also, according to Al-Salhi, about transparency in transactions and the provision of special employees from within banks according to the evaluation and work of the trader, unlike Iraqi banks that deal with us as employees in a dry manner.
According to the World Bank, less than 5 percent of small and medium enterprises obtained loans from local Iraqi banks, while most merchants and investors resorted to borrowing from family and friends.
Ghanem attributed this to the high value of interest that banks take, especially in investment projects, as it ranged between seven to ten percent, while most of the world's advanced banks do not reach more than one percent.
Iraq was ranked 172 out of 190 countries ranked in the World Bank’s Ease of Doing Business Index report, just ahead of Afghanistan and war-torn Syria, despite it being the second crude producer in OPEC.
Funds in homes
The problems of the Iraqi banking sector do not stop at the companies, as its services are not well received by citizens either.
World Bank figures indicate that only 23 percent of Iraqi families have an account with a financial institution, which is one of the lowest in the Arab world, and those account holders are especially state employees whose salaries are distributed to public banks at the end of each month.
But salaries do not remain long in the accounts, as soon queues form in front of banks of employees who withdraw their salaries in cash and prefer to keep them in their homes, due to the weak confidence of Iraqis in banks.
Memories of bank looting and robbing during the 2003 invasion are still fresh in their minds, and many lost their savings.
Nabil Kadhim was one of the victims, telling France Press that after the bank robbery, I had great difficulty in retrieving my money, and that only happened after years, when I lost confidence in the banks,
in addition to that, Kadhim attributes his reluctance to keep his money in the bank to the lack of electronic and online payment mechanisms. Cards in buying and selling transactions, especially in large amounts.
Kazem prefers to resort to the services of exchange offices or private banks to obtain financial transfers from abroad because they are better and faster than government banks, but even safer than them, and
economic expert Abbas Anid Ghanem explains that Iraqi banks do not allow depositing in dollars for savings purposes, and this causes a great loss of hard currency.
This also reveals the lack of confidence in the local currency, as many citizens convert their savings and money into dollars and hoard them in homes.
Ghanem points out that there is a paradox between official discourse and reality.
The state appeals to citizens to deposit their savings in banks, while it does not amend the laws of these banks and does not provide them with any basic services.
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