The governor of the Central Bank of Iraq (CBI) confirmed Wednesday that Iraq faces no obstacles in withdrawing oil revenues from US banks. This comes despite recent reports that Washington sanctioned several Iraqi banks over alleged illegal dollar transactions.
Additionally, Ali Alaq said that during the second scientific conference at the University of Duhok’s College of Administration and Economics: “We receive US dollars daily and convert them directly to Iraqi dinars. This allows the Ministry of Finance to meet its needs and pay those entitled to dollars in exchange for dinars.”
Therefore, Iraq deposits its oil revenues in US banks, mainly the Federal Reserve. This system helps stabilize the dinar, control inflation, and support other critical financial operations. The practice began after the 2003 invasion under UN and US oversight.
In August, Iraq Observatory reported that 35 of the 72 banks in Iraq had been sanctioned by the US for alleged illegal dollar transactions. Oil sales remain Iraq’s main source of income. The federal government relies on them to cover expenses and pay civil servants. In August alone, Iraq generated an estimated $7.1 billion from oil exports.
Moreover, Iraq passed a three-year budget in June 2023 with $152 billion in spending, allocating 12.6% to the Kurdistan Region. Alaq noted, “The budget contains significant expenditures, which has increased the deficit.” He added that the Ministry of Finance and the CBI coordinate to maintain financial stability.
Therefore, the government plans to establish sustainable finances, including boosting non-oil revenues to reduce exposure to economic shocks. Alaq emphasized: “Financial sustainability is an important goal that we are all working on.” The 2025 budget table has not yet reached Parliament, and past revenue estimates often differ from actual figures.
Furthermore, the Central Bank of Iraq (CBI) had announced plans to remove zeros from the dinar to strengthen the currency. Alaq confirmed the project is ongoing. Iraq’s dinar has recently shown recovery, with the market rate approaching the official 1,320 IQD per US dollar after a period of volatility and speculation.