International Compact with Iraq


IBN: World Bank / Republic of Iraq Financial Sector Review Summary

Posted: September 27, 2011 by THE CURRENCY NEWSHOUND 

A new World Bank report released today, Republic of Iraq Financial Sector Review,highlights that while reforms are ongoing in the financial sector, the country needs to push further to ensure that a system still characterized by state-domination and lack of transparency reaches its full potential.

The report stresses the critical importance of the financial sector in modernizing the Iraqi economy and allowing it to reach its full potential.

“The link between sound and well-developed financial systems and rapid and sustained economic growth is clear and backed up by decades of empirical evidence in many developed and developing countries,” says Sahar Nasr, World Bank Finance Lead Economist in the Middle East and North Africa region and the report’s principal author. “Efficient and prudent allocation of resources by the financial system is absolutely critical for increasing productivity, enhancing equality of opportunity, and reducing poverty.”

The report assesses the impact of recent reforms introduced by the Iraqi Government and the Central Bank of Iraq on the performance and soundness of the financial sector, as well as the sector’s contribution to enhancing Iraq’s economic growth.

Its key findings about challenges facing the sector include:

  • Domination by the banking system, with most assets held by state-owned banks;
  • The need for further strengthening and consolidation even while many private banks are in the process of developing modern banking practices;
  • Concentration of other financial markets in the Iraqi Stock Exchange but capitalization is low, and few instruments are traded;
  • A small insurance sector, dominated by state-owned enterprises, and is not supervised;
  • Weak financial infrastructure a clear impediment to access to finance; and
  • SME and microfinance not yet well developed.

The report also emphasizes that while work should commence on a broad range of issues, some key decisions need to be taken immediately and others may be implemented over the medium term. Crucial issues to be addressed up front are the role of state banks and the creation of a level playing field for all banks.

This will need to be followed by the early adoption of the proposed permanent Securities Law and steps to turn the insurance Diwan into an effective supervisor. Supporting ongoing efforts will be needed to address financial sector infrastructure, including supervision, credit registry, the collateral framework, judicial systems, and accounting and auditing frameworks.

The progress and pace of reforms have been commended by donors and the international community despite ongoing challenges on the security front and the predictable resistance to new ideas and reforms. “This is a fairly large agenda but ongoing reforms will facilitate the move forward with the Banking Sector Reform Strategy initiated by the Iraqi government in 2009,” says Hedi Larbi, World Bank Country Director for Iraq.

The Government of Iraq acknowledges that there is still work to be done to fully reform the sector and address its main challenges.

“We are aware that we still have some way to go to achieve the reform we want and Iraq deserves and we will continue to foster efforts to enhance our financial system” says H. E. Dr. Rafie El Essawi, Republic of Iraq Minister of Finance “This report and its recommendations will assist us in the ongoing efforts to meet this challenge”.

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Let us think about this for a moment. With all the irons Iraq has in the fire, this one should bring as much satisfaction and importance as any others. It mentions a time line of five years from the date of announcement or creation which ever is sustainable I suppose. Does it really matter, I think not. But what this does point out is that Iraq has had lofty and admirable goals to do exactly what they have been
trying to achieve, one of them being revitalizing the economic environment as it states in the writing below. You can't revitalize your economic picture with a worthless currency worth an eighth of a cent.


International Compact with Iraq

From Wikipedia, the free encyclopedia
The Compact was held at Infra City in Upplands Väsby

The International Compact with Iraq is an initiative of the Government of Iraq for a new partnership with the international community. The Compact, jointly chaired by the Government of the Republic of Iraq and the United Nations, with the support of the World Bank, establishes a vision that, "five years from now, Iraq shall be a united, federal and democratic country, at peace with its neighbors and itself, well on its way to sustainable economic self-sufficiency and prosperity and well integrated in its region and the world." Guided by the Millennium Development Goals, the Government will work to meet basic needs, protect the rights of all citizens and ensure the optimal use of the country’s resources for the common good and "bring together the international community and multilateral organizations to help Iraq achieve its national vision." The Compact establishes benchmarks and mutual commitments for Iraq and the international community regarding normalizing the security environment, reconciling the political environment, and revitalizing the economic environment.

The Compact was announced July 27, 2006,[1] was formally introduced at the United Nations on March 16, 2007,[2] and was officially launched May 3, 2007. The first annual review conference for the Compact was held in Stockholm on May 29, 2008.[3] In August, 2008, a cooperation agreement between the United Nations and Iraq’s Government was reached defining a strategy to support Iraq’s reconstruction, development and humanitarian needs for the period 2008-2010[4]

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Mark Aldrich,
Jul 26, 2016, 1:11 AM
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