Imbalance in External Financial Transfers: Insights from Economic Experts
On February 27, 2025, financial and economic specialist Haider Al-Sheikh highlighted an alarming imbalance in the external financial transfers available to Iraqi citizens.
Al-Sheikh noted that the Central Bank of Iraq, alongside other relevant governmental bodies, has seemingly overlooked the critical issue of external transfers. He pointed out that the operations of Western Union, which provides essential financial services, have been suspended in Iraq for several months. This suspension has significantly hindered citizens’ ability to send or receive funds from abroad through banks and exchange companies.
The impact of this service disruption is particularly detrimental for those engaged in professional relationships with foreign companies and organizations. Al-Sheikh emphasized that the existing policy allows for an exchange rate calculation of $100 at 117,000 Iraqi dinars upon receipt from abroad, lacking any oversight or intervention from the Central Bank.
Economic academic Abdul Rahman Al-Mashhadani criticized the performance of the Central Bank, describing it as unconvincing. He expressed concern over the confusion surrounding the new electronic platform, arguing that such disorganization should not be an excuse for escalating exchange rates to unprecedented levels.
In response to these developments, Raed Al-Maliki, a member of the Legal Committee, announced efforts to hold the Central Bank and governmental authorities accountable for their ineffective measures in addressing the depreciation of the Iraqi dinar. Al-Maliki pointed to a growing gap between the official and parallel exchange rates, stating that this situation has resulted in substantial financial losses for the state and benefitted corrupt entities at the expense of the populace.
He elaborated on the ramifications of these conditions, including the burden on most commodity prices, which are heavily influenced by the parallel exchange rate as opposed to the official one. Al-Maliki further indicated that the government’s inability to regulate informal trading outlets, particularly in the Kurdistan region, has compounded the issue. He remarked that there are over 32 illegal trading outlets operating without oversight, in addition to the challenges faced by the 400,000 small merchants who rely on the parallel dollar to circumvent official procedures and tax obligations.
Another critical concern raised by Al-Maliki is the speculation and commission practices prevalent in the banking sector. He noted that banks are purchasing dollars at the official rate while selling them at inflated prices without any legal repercussions. Moreover, he revealed that the issue of providing passengers with dollars for travel has escalated into a corruption matter, costing approximately 600 billion dinars, with the dollar allocated for fraudulent travel claims that lack proper verification.
The current financial landscape in Iraq calls for urgent intervention and comprehensive reforms to address these systemic challenges within the economic framework.
