KRG Prime Minister: An Efficient Banking System Fosters Economic and Trade Growth

On Saturday, October 21, 2023, Prime Minister Masrour Barzani of the Kurdistan Regional Government (KRG) addressed the annual Iraqi banking sector conference in the Kurdistan Region.

The conference convened prominent figures, including Ali Mohsen Al-Alaq, the Governor of the Central Bank of Iraq, and bank executives from Iraq, the Kurdistan Region, and Arab nations.

Below is the Prime Minister's full speech:

"In the Name of God, Most Gracious, Most Merciful,

“I am honoured to join you today at this significant conference dedicated to banking systems and the advancement of banking services, particularly those pertaining to private sector banks. I extend my heartfelt appreciation to the organisers for choosing this critical topic. The imperative for reform, development, and improved efficiency in the banking sector underlines the urgent need for economic progress.

“Establishing a robust, efficient, and agile banking system stands as a key objective for the KRG's ninth cabinet. In our pursuit of this goal, we are committed to reforming the banking sector and building a modern, resilient infrastructure for our regional economy. I will outline some key initiatives aimed at transforming the banking sector in the Kurdistan Region.

“Over the next two years, pensioners in the Kurdistan Region will no longer need to endure long waits in harsh weather to collect their salaries. Their pensions will be deposited directly into their bank accounts promptly.

“Traders will no longer be burdened with carrying large sums of cash. Instead, they will enjoy the convenience of managing their finances online.

“Applicants for small loans will be able to apply online, and those wishing to send money to relatives abroad will have the option to do so online, eliminating the need for transfer agencies.

“By year-end, thousands of public sector employees will be enrolled in the "My Account" project, enabling them to have private bank accounts for salary deposits. We are committed to ensuring that one million employees have bank accounts by the end of the following year, and we are expediting the program's implementation.

“For years, there has been debate about whether the government or banks should lead this initiative. In this cabinet, we have decided that the government will take the lead to strengthen our banking system. We endorse the expansion of the banking sector through the following program: once all public sector employees are registered with banks, we will also require private sector employees to do the same. This will make banking services accessible to hundreds of thousands of people in the Kurdistan Region.

“We also encourage banks to expand their branches across the Kurdistan Region and increase the number of ATM machines tenfold. Additionally, we are working to ensure the availability of electronic payment machines in most markets across Kurdistan.

“We must acknowledge that banks have thus far fallen short of meeting the needs of our citizens. Overreliance on cash has hindered our economic growth and created opportunities for fraud and money laundering. It's time for change. We will offer any necessary support to private banks to enhance and expedite their services.

“Our goal is to foster healthy competition among banks in the Kurdistan Region, allowing citizens to freely choose their bank based on the quality, advancement, and speed of banking services.

“Currently, we have selected only five private sector banks to participate in the "My Account" project. We anticipate the inclusion of more banks in this initiative in the future. The selection of these banks will adhere to transparent criteria established in collaboration with the Central Bank of Iraq. Notably, selected banks must have an extensive regional branch network, digital capabilities for mobile services, an extensive ATM network, and electronic financial services.

“I express my gratitude to the banks for their involvement in this endeavor and encourage them to invest in their banking products and services.

“In the near future, our citizens will experience significant changes in various aspects of their lives. Payment methods for purchasing food and fuel will evolve, and credit card usage will become more convenient when traveling abroad. Employers will have the opportunity to leverage e-commerce for seamless business transactions.

“The government is also adapting its approaches to payments and revenue collection. In summary, our commitment is to ensure that citizens and businesses have access to financial services at their preferred time and place.

“We must ensure that the hard-earned money of our farmers goes directly into their bank accounts when they sell their wheat and grain to the federal government.

“I am confident that our current banking partners will emerge as the largest private banks in the country within the next five years. In this regard, I express my sincere gratitude to the Governor of the Central Bank of Iraq, Mr. Ali Al-Alaq, and Prime Minister Mohammed Shia' Al Sudani for their contributions and support in this crucial undertaking.

“We will continue to coordinate and collaborate with the Iraqi federal government to combat money laundering and contribute to the stability of the Iraqi dinar. I am pleased with the progress we have made this year in addressing money laundering and terrorist financing. Significant progress has been achieved, but there is still much work to be done, and we remain committed.

“In advanced societies and countries, a sophisticated and dynamic banking system is a fundamental requirement for daily life. Simultaneously, a modern and robust banking system significantly contributes to economic development, offering financial services and convenience to both employers and investors.

“We can assert that the robustness of a country's banking system is a fundamental principle and a prerequisite for economic strength within a society. A resilient and effective banking system creates a conducive environment for economic growth and trade.

“One significant impediment to establishing a robust and advanced banking system in Iraq and the Kurdistan Region is the lack of public trust in banks due to political and economic instability.

“However, at the KRG, we are committed to supporting banks through building trust between financial institutions and the public. This entails safeguarding their capital and wealth within the banking sector. Nevertheless, banks must expand their services. This is a collaborative effort between the government, banks, and the public. We must restore the trust that is fundamental to the functioning of banks.

“Given the recent years of political instability, conflict, and uncertainty, both Iraq and the Kurdistan Region urgently require comprehensive reconstruction efforts and substantial development of economic infrastructure across all sectors. To achieve this goal, the establishment of a dynamic and advanced banking system is pivotal, serving as a cornerstone in facilitating our ongoing journey of reform and fostering prosperity.

“The initiatives led by Prime Minister Mohammed Shia' Al Sudani, in collaboration with the federal government and KRG, are promising. We anticipate significant economic advancements in the near future through continued mutual cooperation and support.

“I thank the organisers of this conference once again and I hope it yields positive outcomes and recommendations for enhancing the banking sector and overall economic conditions.

“May joy and success accompany you, and may our nation thrive."