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Economic Overview

Iraq's Economy Is Moving Forward:

Click the links below to find out more about:

Economic Indicators

The Government’s Plan to Develop the Country

The Financial System

The Legal System

Iraq’s Infrastructure and Transportation

External Links

Economic Indicators (2008 estimates)

Population 31.0 million
Labor Force 7.7 million
GDP USD $129.0 billion
GDP per capita USD 4163
Consumer Price Inflation 6.8%

The Government’s Plan to Develop the Country

The Government of Iraq published the National Development Strategy, a comprehensive plan for Iraq’s economic development through 2007 - 2010.
The National Development Strategy is built around four major pillars that will shape government policies for reconstruction and development. They are:

Strengthening the foundations of economic growth;
Revitalizing the private sector;
Improving the quality of life;
Strengthening good governance and security.

The Financial System

Under the previous regime, banks were tightly controlled by the government and isolated from international advances in technology and business practices. Private banks, introduced into Iraq only in 1992, were prohibited from conducting international transactions. The two largest state-owned banks, Rashid Bank (170 branches throughout Iraq) and Rafidain Bank (153 branches throughout Iraq) and the Industrial Bank and Agriculture Bank, controlled 85% of Iraq’s financial assets.

By 2003, Iraq’s banking system was in fragile shape. A lack of modern technology meant that banks had no way to process payments electronically and had an outdated system for clearing checks. Businesses often settled payments in cash.
Most banks did not have voice or data connections, and documents and correspondence between branches of the same bank were carried by courier. The former regime set interest rates for the banking system. Most loans were for a one-year duration and rolled over annually, with the interest rate rescheduled each year.

Since then, the Iraqi financial system has gone through a comprehensive series of reforms, including:
Major revisions to the tax code;
Establishment of the Trade Bank of Iraq for trade financing;
Transition of the Central Bank of Iraq into an independent institution;
Creation of strategic plan for long-term bank consolidation and rehabilitation;
Introduction of a new currency (New Iraqi Dinar) in October 2003;
New capital requirements for banks;
Adoption of an anti-money laundering law in 2004;
Liberalization of domestic interest rates.

The capabilities and activities of Iraqi banks included: Deposits, Credit Facilities (secured and unsecured), Investment Activities (Government Securities and Strategic Investments), Foreign Currency Dealings, Securities (execution only), and Trade Services. Also available are the following banking services: Import Documentary Credits, Export Documentary Credits, Payments into Iraq, Payments out of Iraq, and Cargo Insurance.

Iraq’s first bank debit cards were issued by the Trade Bank of Iraq in 2005 and the first automatic teller machines (ATMs) was put in place.

The Legal System

The new constitution of Iraq was approved by a majority of Iraqi voters in October 2005. The constitution was finalized by Iraq’s permanent government in 2006.

As of early 2006, the legal system in Iraq consisted of layers different of law. Some laws were enacted under the former regime, some pre-date the former regime, and others are new law and regulations enacted since 2003 by the Coalition Provisional Authority or by the Government of Iraq.

Iraq's Infrastructure and Transportation

Airports

Iraq has two major international airports at Baghdad and Basrah. Several provincial airports have been renovated and reopened since January 2005, including Erbil, Al Al Sulaymaniyah, Mosul, and Kirkuk. A major new airport is planned at Najaf. Iraqi Airways resumed flights in 2004 to Amman and Damascus, and began service to Dubai in 2005. , As of early 2006, Baghdad, Basrah, Erbil, and Al Sulaymaniyah airports receive regular international flights.

Iraq’s airports and civil aviation will be developed under a master plan, which may include outsourcing airport management to private operators.

Seaports

Iraq has six seaport facilities in Basrah province; Umm Qasr is the main deep-water port, with 22 platforms, some of which are dedicated to specific goods (such as sulfur, seeds, lubricating oil, etc.) The other five ports are smaller and more narrowly specialized.

In addition to on-loading and off-loading cargo, Umm Qasr has over 175,000 square feet of covered warehouse space and 800,000 square feet of other storage facilities. Fencing has been installed around the perimeter of the port and it is entirely lit at night. There is ample nearby land to expand port facilities in the future.

A ferry service operates three times a week, between Umm Qasr and Dubai, moving people, vehicles, and cargo.

Al Maqal port was inactive for over 20 years, having ceased operations in 1980. Over $7 million has been invested in port infrastructure there since 2003, but Al Maqal will require more investment to become fully operational again.

Abu Flus, on the Shatt al-Arab waterway, handles smaller import and export loads of cars, agriculture products, construction materials and electrical goods. This port also requires further investments in infrastructure to reach full capacity.

The Ministry of Transportation is planning a major deepwater port to be located 100 miles south of Basrah on the Al Fao peninsula. This project, called Basrah Grand Port, will be better located for access to the Gulf, and is expected to have 100 berths when completed. The Ministry began receiving formal expressions of interest for the project.

Railways

Iraq’s rail service has five major routes:

Baghdad-Basrah-Umm Qasr port
Baghdad-Ninawa-Yurubiyah (links to Turkish system)
Baghdad-Haditha-Qubaysah (links to Syrian system)
Baghdad-Kirkuk-Arbil
Bayji refinery-Al Qaim fertilizer plant

Iraq’s railway system was a model of efficiency and productivity in the 1970’s and 1980’s. Conflict and economic sanctions took their toll, however, and much of the system’s infrastructure has been in disrepair for several years. Some improvements have been made since 2003, but the railway system is only operating at about 10% of capacity.

Priorities for the railway include maintaining and upgrading track, rehabilitating railway stations, and repairing or replacing rolling stock and maintenance equipment. In addition, training centers for railway engineers and staff must be upgraded, and a national strategy for the system is planned, which will asses the potential benefits of greater private sector participation.

Road Transport

Iraq has nearly 40,000 kilometers of roads , 80% of which are paved. Some roads sustained damage during the recent conflict. Repairs to both roads and bridges have been extensive and are ongoing.

The Ministry of Transportation plans to explore the potential for establishing a bus rapid transit system including dedicated bus lines.

Visiting Iraq

Climate: Cool winters, extremely hot summers, with cold winter conditions in the north.

Time zone: GMT + 3 hours.

International dialing code: 964

Electricity: 220 volts; AC 50Hz

Currency: New Iraqi Dinar, introduced October 2003.

Languages: Arabic, Kurdish, Assyrian, Armenian, Turkmeni.

Public Holidays: New Year (January 1); Iraqi Army Day (January 6); Festival of Spring (March 21); Labor Day (May 1); Republic Day (July 14).

In addition, the following Muslim holidays are observed in Iraq.

1st of Muharram (Islamic New Year); 10th of Muharram(Ashura); Mawlid al-Nabi (Prophet’s Birthday); Eid al-Fitr (end of Ramadan); Eid al-Adha (Festival of Sacrifice).

Friday is an official day off in Iraq and Saturday is an official day off for Government of Iraq offices.

Visa requirements

Visas are required for most visitors to Iraq. Check with the Iraqi embassy nearest you for up to date information: List of Iraq missions abroad: Ministry of Foreign Affairs

Getting to Iraq

Baghdad International Airport has direct flights to and from Jordan, Lebanon, Syria, Kuwait, UAE and Turkey. Erbil and Al Sulaymaniyah airports have direct flights to Turkey and to Western Europe.

External Links

USAID-Tijara Provincial Economic Growth Program

USAID-Inma Agribusiness Program

Government of Iraq

Ministry of Trade

Ministry of Foreign Affairs

Ministry of Agriculture

Ministry of Industry and Minerals

Ministry of Water Resources

Ministry of Higher Education and Scientific Research

Ministry of Oil

Ministry of Municipalities and Public Works

Ministry of Planning

Central Bank of Iraq

Iraq Stock Exchange

Trade Bank of Iraq

Ministry of Science and Technology

Kurdistan Regional Government

Baghdad Governorate