Concerns Over External Financial Transfers Highlight Economic Imbalances in Iraq
Baghdad, February 27, 2025 — Financial and economic expert, Haider Al-Sheikh, has raised significant concerns regarding the current state of external financial transfers for Iraqi citizens. He emphasized that both the Central Bank and relevant governmental agencies have yet to address this critical issue.
Al-Sheikh reported that Western Union, a major player in financial services, has suspended its operations in Iraq for several months. This prohibition has left Iraqi citizens unable to send or receive money from abroad through banks and exchange companies. He highlighted that many citizens engaged with foreign companies and organizations are missing out on vital payments due to this service suspension. Additionally, he noted an alarming discrepancy in the exchange rates applied, where $100 is valued at 117,000 Iraqi dinars without oversight from the Central Bank, exacerbating the situation.
Dr. Abdul Rahman Al-Mashhadani, an academic and economist, critiqued the performance of the Central Bank, labeling it as unconvincing. He pointed out the lack of clarity in managing a new electronic platform, which should not have led to the volatility of exchange rates reaching unprecedented levels.
In a related context, Raed Al-Maliki, a member of the Legal Committee, announced intentions to hold the Central Bank and government accountable for their failure to effectively address the depreciation of the Iraqi currency. He indicated that this situation has led to substantial losses for the state, amounting to trillions of dinars, while simultaneously enriching corrupt entities at the expense of the populace. The pricing of most commodities is increasingly tied to the unofficial parallel rate, rather than the official rate.
Al-Maliki further stated that the government’s inability to manage informal trade channels has hindered efforts to unify customs policies and suppress illegal outlets, especially in the Kurdistan region, which reportedly has over 32 illegal points of entry. He highlighted the struggles of over 400,000 small merchants in Iraq, who are compelled to rely on the parallel dollar to circumvent bureaucratic hurdles and tax obligations.
Moreover, Al-Maliki criticized the government’s and Central Bank’s failure to mitigate speculative practices and unregulated commissions in banks. He pointed out that banks are acquiring dollars at the official rate while selling them at inflated prices without facing any legal repercussions. He also disclosed that the issue of providing dollars for travelers has become a matter of corruption, costing the state approximately 600 billion dinars, as funds are raised for travel purposes without verifying the genuine necessity for travel.
In summary, the Iraqi economy is facing notable challenges in managing external financial transfers, currency devaluation, and speculative trading practices. The ongoing issues necessitate urgent attention and strategic intervention to restore stability and trust within the financial system.