Bottleneck Risks: Iraq’s Reliance on a Limited Number of Correspondent Banks

Bottleneck Risks: Iraq’s Reliance on a Limited Number of Correspondent Banks

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Iraq's 2025 budget is expected to be the first of its kind, relying on a system of correspondent bank transfers amid the challenges of low oil prices and high domestic spending.

The Iraqi economic and financial system is facing a major transformation with the cessation of the “window” and “platform” and the shift to direct bank transfers, which may reveal gaps in the readiness of financial institutions for this change.

In light of the failure to control government spending in line with the decline in oil revenues, this is expected to lead to a large financial deficit, with the possibility of delaying the payment of operating expenses such as employee salaries and retirement, which threatens the stability of the Iraqi economy during this critical transitional period.