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Rudaw

Kurdistan

Baghdad, Erbil reach agreement on Central Bank oversight

By Rudaw 13/3/2018
The KRG Finance Ministry delegation (L) in a meeting with a delegation from the Iraqi government. Photo: Rudaw TV
The KRG Finance Ministry delegation (L) in a meeting with a delegation from the Iraqi government. Photo: Rudaw TV
ERBIL, Kurdistan Region — Iraqi and Kurdish delegations have reached an agreement to bring the Kurdistan Region’s banking sector under the purview of the Central Bank of Iraq. 

"Agreement has been made for the Central Bank to exercise its supervisory authority in the Region over the banking sector and the financial institutions that are not banks,” Ali Mohsen al-Alaq, governor of the Iraqi Central Bank, told reporters after a meeting in Erbil. 

The KRG’s prime minister and finance minister have given their “direct support” for the Central Bank to do so, Alaq added. 

He headed up a delegation from Baghdad that arrived in the Kurdistan Region on Sunday and met with Kurdish officials, including KRG Minister of Finance Rebaz Hamlan.

"A big part of the meeting was dedicated to the issue of the private banks that have tax-related issues because they have to pay it here and in Baghdad as well. We agreed on this issue today,” Hamlan said after the meeting. 

They also discussed trade banks that are operating in the Kurdistan Region but have not been licensed by Baghdad and agreed on a mechanism to decrease the number of banks in the Kurdistan Region and to ensure they are all licensed by the federal authorities, the finance minister explained. 

The two sides also discussed the issue of customs. Who receives customs revenues has been a point of disagreement between Erbil and Baghdad. 

Hamlan said there will be a meeting next week to “reorganize the customs tariff.”

The final issue to be finalized is taxes on companies working both in the Kurdistan Region and Iraq, he added, noting that they expect a resolution on this matter by June 30.
 
Alaq said they have agreed to eliminate double taxes, explaining that this is in conjunction with effort to put things in their legal and constitutional place to bring stability to the country.

Regarding payment of KRG’s public sector salaries, Hamlan said the auditing teams have completed more than 90 percent of the payrolls of the ministries of health and education and funds are ready to pay the salaries. 

The directorate general of Iraq's financial oversight body arrived in Erbil on Tuesday to prepare the final report and send it to the Iraqi prime minister, Hamlan added.
 
Before their meeting, Hamlan had told Rudaw that they were "optimistic" about the outcome.

"Our meeting is to reach an agreement," Hamlan had said. "We want to resolve those issues that have economic dimensions.”

Around $210 million – 250 billion Iraqi dinars – has been deposited by the Iraqi government into the Erbil branch of the central bank, something the governor says is normal procedure because the central bank divides its reserves across its branches.

However, the governor said his visit is not directly related to the issue of unpaid salaries – rather he has come to Erbil to coordinate with the KRG’s Ministry of Finance and to organize the banking sector of the Kurdistan Region.

Auditing teams and other delegations have visited the KRG in recent months since the breakdown in relations between Baghdad and Erbil.

Iraqi Prime Minister Haider al-Abadi hinted last week that the issue of the salaries for civil servants will be resolved before the Newroz break, March 21.

Updated at 5:27 pm


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