Iraq’s finance sector needs continued reform if it is to help the country rebuild its infrastructure and deliver on ambitious development plans – that was the message stressed repeatedly at a London conference that gathered Iraqi government officials, financiers, investors and other stakeholders in the economy.

For Iraq’s next phase of development, “the focus should be specifically brought to big projects, namely infrastructure and strategic projects across all governorates and districts,” Mudher Kasim, deputy governor of the Central Bank of Iraq, told attendees at Iraq Finance 2012.

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Housing and construction minister Mohammed al-Darraji said the ministry’s budget for 2012 to 2015 includes 61 ongoing projects totalling $3bn, in addition to 10 yearly projects totalling $2bn. Iraq also has an urgent need to build an additional 60,000 housing units at a cost of $2bn.

According to Mr Darraji, Iraq’s construction projects are expected to reach $15bn by 2016. But these projects will require outside financing, and that requires more reform of the banking and finance system. “The government budget is not enough to rebuild Iraq,” said Qusay al-Suhail, first deputy president of the Iraqi parliament.

Among the conclusions of the event were the urgency of ongoing reforms and of restructuring state-owned banks and turning them into independently capitalised corporations. Delegates also urged the removal of restrictions on government and government-related entities in their dealings with private banks, the reduction of delays in the registration of companies, the unification of company laws and reduction in the complexity of corporate registration rules and requirements, as well as the development of the accounting and financial management sector and an increase in the number of trained accountants to International Financial Reporting Standards.  

The central bank was encouraged to consider the costs of financial transactions and intermediations by removing market distortions.

There was also discussion of the need for a national investment fund to support the financing of infrastructural projects in the regions and provinces and to support co-financing of public-private partnerships, and also for the establishment of regional and provincial development banks to support the financing of the private sector.

Given the obvious potential for Islamic finance in Iraq, the government should establish the legislative and regulatory framework for Islamic banking, so as to create a parallel banking and financial sector to the conventional model.

Iraq Finance 2012 took place in London on September 18 and 19, 2012, and was opened by deputy prime minister Dr Rowsch Nori Shaways. More than 280 delegates attended, representing 150 international companies from 22 countries.