Iraq's banking system heavily dependent on oil revenues, says PM's economic advisor

Shafaq News/ Mudhhir Mohammed Saleh, economic advisor to Iraqi Prime Minister Mohammed Shia Al-Sudani, described the country's banking system as "highly reliant on oil revenues" and called for comprehensive reforms to address its structural issues.

In a statement to Shafaq News Agency, Saleh explained, "The Iraqi banking sector is rentier in nature, regardless of ownership. It depends heavily on oil revenues and government liquidity, both directly and indirectly."

He further elaborated, "The banking system derives its activities from government spending, indicating a lack of financial independence and an inability to mobilize desired savings within society from surplus financial forces towards the investments needed for high financing of sustainable growth and development."

Saleh stressed the need for "a comprehensive reform process to create market institutions," noting that this would allow Iraq's banking sector to integrate with the global financial and banking systems, making it attractive to international banks.

Earlier, Prime Minister Al-Sudani announced the formation of a high-level committee aimed at aligning Iraqi banks with international financial standards. He also instructed private banks to establish balanced relationships with financial institutions, Arab banks, and investors.