Mutlaq continued, “This program was halted due to an increased demand and lack of liquidity,” and confirmed that “Iraqis desperately need this loan due to the suffocating housing crisis affecting the country.” He explained, “The increase in the capital of the Rasheed and Rafidain Banks will be achieved in the 2014 budget.”
As for the investment, he said, “The ‘100 salaries’ loans do not yield the desired revenues for governmental banks. They are, however, designed to help people overcome the housing crisis.”
Abdul Abbas Shayya, a member of the parliamentary Economic Committee, explained, “The increase in the capital of the two banks is not of great [significance]. Banks are not usually driven by capital, but rather by deposits and banking transactions.”
Speaking to Al-Monitor, Shayya added, “Deposits in the two banks exceed 18 trillion dinars [$15.48 billion], which is not that big. Yet the banks are limited by the banking law and do not have the right to invest all of this money. They can only use these deposits to lend to employees if liquidity is available.” He pointed out that “Part of these deposits are frozen and can’t be used in investment projects.”
Shayya said, “Iraq needs a new banking law that allows a transition from a totalitarian economy to an open-market economy.”
Furthermore, Bassem Jamil Antoine, an Iraqi economic expert, said, “The capital of Rafidain Bank was 25 billion dinars, which hardly fulfills the needs of the bank, because it deals with many billions [of dinars].”
Antoine told Al-Monitor, “The decision to increase the capital of the two banks came because of a similar increase in private banks, which will increase their capital by at least 250 billion dinars this year.” He explained, “These numbers are considered small compared to the volume of transactions and the deposit balance in the Rafidain and Rasheed Banks, which are government departments. Accordingly, government departments and ministries don’t deposit their accounts in private banks.”
Omar al-Shaher is a contributor to Al-Monitor’s Iraq Pulse. His writing has appeared in publications including France’s Le Monde, Iraq’s Alesbuyia, Egypt’s Al-Ahaly and the Elaph website. He previously covered political and security affairs for Iraq’s Al-Mada newspaper.