Shafaq News- Baghdad

Most of Iraq’s state-owned banks have halted or sharply curtailed lending and several are operating without clear credit plans for 2026, an informed source told Shafaq News on Saturday.

The source said the lack of credit plans has restricted financing across a range of services, including construction and renovation loans, funding for small and medium-sized enterprises (SMEs), investment and housing projects, and electronic personal advances.

The source said the slowdown was weakening the role of state banks in financing Iraq’s economy, particularly for SMEs and investors seeking funds to launch or expand projects.

The source called on the government, parliament and its Finance Committee to examine the banks’ lending activity and question bank management over the decline in lending and advances, the absence of credit plans and limited investment financing.

Restoring lending programs is essential to supporting investment and stimulating economic activity, the source said, noting that the government program calls for investment support through loans and banking initiatives.

The source also urged state banks to adopt clear credit plans with measurable targets to direct financing toward productive sectors and investment projects and strengthen the banking system’s role in economic development.

In February, major state-owned banks, including Rafidain and Rasheed, had halted loans and advances amid liquidity shortages and a lack of clear credit planning. Earlier this month, the government began considering leadership changes at several state banks, with managers expected to be evaluated partly on their ability to expand access to loans, salary advances and other banking services.

Read more: Iraq’s private banks: Capital Growth and the structural credit gap