The Central Bank of Iraq .Rudaw photo.
ERBIL, Kurdistan Region – In a bid to boost the economy, the Iraqi Central Bank has earmarked $5 billion for small business loans to be issued through government and private banks. The loans are interest-free and borrowers are charged only for services amounting to 5.5 percent of the total loan.
"We provide loans more for those projects that have stopped work due to the economic crisis or have problems funding projects. For new projects, we have to carry out benefit investigations to make sure to what extent the project will become successful when it goes into effect," said Rihab Mati Hannah, head of Mosul Bank’s loans department.
"It is better for us to support those projects that have already started, even those that have started a year ago now," Hannah added.
Some of the Kurdistan Region's banks have already applied to have share in the sum earmarked by the central bank.
Cihan Bank and Kurdistan International Bank have each received funds amounting to two billion Iraqi dinars ($1.7 million). RT Bank and Erbil Bank are in the process of completing legal measures to also receive a share.
"These kinds of loans are very beneficial for society, serving small and mid-sized businesses. At this time, these businesses need a party to support them to escape a crisis they suffer," Noora Rafid, a Kurdistan International Bank representative, told Rudaw.
Rafid added the largest loan they offer is 50 million Iraqi dinars ($42,700).
"If you need six million, 10 million or 15 million, you could receive it," she said, adding "the loan will be in line with how much the borrower and the project need."
For more information, she urged people to visit the bank.
The Kurdistan Region has been suffering an economic crisis since early 2014 due to a triple shock – budget cut from Baghdad, the ISIS war, and a dramatic drop in oil price, the Region's main source of revenue.
In this tough economic environment, the number of new businesses in the Kurdistan Region has dropped to a near 10-year low. Only 1,233 new firms were registered in 2016, down from 3,423 in the boom year of 2013.