Investors in the IKR face many of the same challenges as investors elsewhere in Iraq, but the IKR has a traditionally more stable security situation. However, the region’s economy has struggled to recover from the 2014 ISIS offensive, the drop in oil prices, the aftermath of the 2017 Kurdish independence referendum, and ongoing disputes with the central government over revenue sharing. He blamed the current rise in the street price of the dollar on the “reluctance of certain merchants” who “do not practice legitimate activities and operations” to use the official electronic platform used for currency requests.
In addition, Iran-aligned militias may threaten U.S. citizens and companies throughout Iraq. Iraq ranks 121 out of 190 countries in the World Bank’s “registering property” index of its 2020 Doing Business report. Iraq does not have a bilateral investment treaty (BIT) or a bilateral taxation treaty with the United States. The United States and Iraq signed an Agreement for Economic and Technical Cooperation on July 11, 2005, and it entered into force December 18, 2013.
It’s also a fact that some countries may not be affected by recessions at all. For example, since Iraq’s primary international product is oil, and global demand for that commodity is fairly constant, the country’s economy could be relatively unaffected by a global meltdown. Alternative investments are the types of assets that tend to perform poorly when conventional investments, like stocks and bonds, are particularly strong. But during bear markets, alternative investments often spring to life, and attract the attention of mainstream investors. As we have seen, before 2003, the IQD fell sharply in the parallel market against the dollar due to the ongoing wars and subsequent economic blockades. Nevertheless, after the central bank’s independence in 2003, there has been a rising value of the Dinar, which became relatively stable against the dollar.
Under the law, foreign investors are entitled to incentives, including full property ownership, and capital repatriation and tax holidays for 10 years. The KRG is generally open to public-private partnerships and long-term financing, as demonstrated by the KRG’s oil and gas sector contracts that increase production. In 2020, the KRG Ministry of Planning (MOP) published a framework for creating public-private partnerships in the region but has not drafted legislation to codify it. Legislation to amend the investment law to broaden its reach to potential investors remains pending in the Iraqi Kurdistan Parliament (IKP). Foreign investors continue to encounter bureaucratic challenges, corruption, and a weak banking sector, which make it difficult to successfully conclude investment deals. State-owned banks in Iraq serve predominantly to settle the payroll of the country’s public sector.
Limited information on debt obligations was available on the Central Bank and MOF websites. “The listing of almost one third of the private banks as banned from dealing with the U.S. dollar will have negative consequences from many perspectives,” Haidar al Shamaa, owner of a private bank in Baghdad said at a news conference Wednesday. Much like its currency, Iraq’s economy and political situation can only improve.
- In early 2020, the CBI launched a real estate lending initiative and an Islamic finance consolidation program.
- That will require a peaceful, promising business atmosphere to establish investor confidence and revive its economy.
- The promulgation of new regulations with little advance notice and requirements related to investment guarantees have also slowed projects.
- To illustrate, while ministries must publish regulations imposing duties on citizens or private businesses in the official government gazette, internal ministerial regulations have no corresponding requirement.
Some pointed to the rise of the Kuwaiti dinar after the Gulf War as evidence that the Iraqi dinar could experience similar success. At the same time, several U.S. regulators warned of scammers selling dinar “investments” for inflated rates and fees. The opportunity was pitched as a way to profit from a nearly worthless Iraqi dinar.
HOW BEST TO INVEST IN IRAQI DINAR
While it is possible to buy them, selling them is not always a straightforward procedure. Several surveys from dealers evinced that the difference between what an individual can buy dinars for and what he can sell them for stood around 20%. It was initially linked to the British Pound until 1959, and then it was tied to the US Dollar, with an exchange rate of 1 Iraqi Dinar to 2.8 US Dollars. During World War I, when Iraq was under British control, the Indian rupee was used, and the initial exchange rate was 1 Iraqi Dinar to 11 Indian rupees. As with buying stocks, bonds, or other currency, when investing, you purchase dinar at a given price and then expect the price to rise. The realquestion, though, is not just can you investin this particular currency, but should you?
Is the Iraqi Dinar a Wise Investment? (
Were any of these events to take place in a major oil-producing region of the world, the price of oil can skyrocket. As it does, Iraq’s economic fortunes could improve – literally overnight – also raising the value of the Iraqi Dinar. Though some economic crises are global in scope, most are more country specific.
The GOI collects and publishes limited statistics with which to compare international and U.S. investment data. The NIC and PICs granted 1067 licenses between 2008 and 2015 (latest statistics available) with a total potential value of $53.9 billion. According to Iraqi law, any person or legal entity has the right to submit corruption-related complaints to the Commission for Integrity and the inspector general of a GOI ministry or body. The Board of Supreme Audit, established in 1927, is an analogue to the U.S. government’s General Accountability Office. It is a financially and administratively independent body that derives its authority from Law 31 of 2011, the Law of the Board of Supreme Audit. It is charged with fiscal and regulatory oversight of all publicly funded bodies in Iraq and auditing all federal revenues, including any revenues received from the IKR.
Legal Regime
Historical patterns also show the immense prospect of Iraq positioning itself as an international energy super-provider. In March 2021, a spokesman for the Central Bank of Iraq announced that the currency would remain fixed for the next four years. Later that year, another government official confirmed that the exchange rate had been established in government budgets. Following the 1991 Persian Gulf dinar investment War, the economy of Iraq languished due to United Nations sanctions and official corruption. As the government of Saddam Hussein struggled to contain inflation and speculation, the Iraqi dinar fell from its prewar value of $3 to less than a penny in 1993. According to prosecutors, a group of men behind an Iraqi currency scheme created a pitch that included war hero tales to lure potential investors.
The Iraqi constitution states that citizens have the right to form and join unions and professional associations. Iraq is a party to both International Labor Organization conventions related to youth employment, including child labor. Iraqi labor laws also regulate working conditions and prohibit all forms of forced or compulsory labor, including by children. However, the GOI has not effectively monitored or enforced the law, which has resulted in unacceptable working conditions for many workers. Iraq ranked 160 out of 180 on Transparency International’s 2020 Corruption Perception Index.
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SOEs are required to seek their parent ministry’s approval for certain categories of financial decisions and operation expansions. However, in practice, SOEs defer to the parent ministry for the vast majority of decisions. SOEs submit financial reports to their parent ministry’s audit departments and the Board of Supreme Audit. The GOI has publicly and repeatedly stated its desire to attract foreign investment as part of national plans to strengthen local industries and promote the “Made in Iraq” brand. The GOI has yet to follow through on commitments made at the Kuwait International Conference for the Reconstruction of Iraq in February 2018 to reform processes and regulations that hinder investment.
The degree to which SOEs compete with private companies varies by sector; SOEs face the most competition in the market for consumer goods. The GOI had expressed a commitment to reforming the SOEs and taking steps toward privatization as part of its previous international financing programs. The main purpose of TBI is to provide financial and related https://1investing.in/ services to facilitate trade, particularly through letters of credit. Although CBI granted private banks permission to issue letters of credit below $50 million, TBI continues to process nearly all government letters of credit. Iraq ranks 186 out of 190 in terms of ease of getting credit in the World Bank’s 2020 Doing Business Report.