October 11, 2020 | banking

Iraq to join European development investment bank


ERBIL, Kurdistan Region – Iraq’s request to join a European development investment bank has been approved, a move that will help the country develop its banking and private sectors and encourage investment, the foreign ministry announced on Friday.

The board of the European Bank for Reconstruction and Development approved Iraq’s application in a vote this week. “Iraq’s formal accession to the bank’s membership will allow it to benefit from international banking expertise to develop the banking sector, and to obtain technical support and assistance that creates a suitable ground for investment,” read a statement from the foreign ministry.

“We hope that this step will be an introduction to joint action aimed at strengthening the private sector in Iraq to compete and contribute to supporting sustainable development in the country,” the ministry added.

The bank was founded to 1991 in the post-Cold War era. It “promotes private sector development and sustainable and inclusive growth through a combination of investments, policy engagement and technical assistance.” Last year, it funneled more than 10 billion euross into 452 projects in Europe, Asia, and Africa.

“We are very proud and happy that we will soon be able to welcome Iraq as our latest member. Today we have taken the first step on what we hope will be a long and successful joint journey,” said Jurgen Rigterink, the bank’s acting president.

Baghdad first sought membership in 2018 and will still need to meet some membership requirements.

Iraq’s economy is heavily dependent on oil sales, leaving it vulnerable to fluctuations in oil prices. When Prime Minister Mustafa al-Kadhimi came to power earlier this year, he said that state coffers were nearly empty because of record low oil prices and years of corruption and wasteful spending.

“Iraq is having its worst annual gross domestic product (GDP) growth performance in 2020 since the fall of the Saddam regime,” the World Bank said on September 30. “Instability, a lack of jobs, corruption, and poor service delivery remain among the most important risks to the country’s long-term growth.”

Long term, structural reform is necessary to build the private sector and secure the economy, the World Bank noted.

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