Iraq's dollar reserve bleeds from inflated import invoices
Iraq's foreign currency reserves are being drained due to inflated import invoices, a local economic expert warned on Monday, calling for urgent reform to the country's trade and currency transfer mechanisms.
Manar al-Obaidi, head of the Iraq Future Foundation, said that trade data from countries such as China, Turkiye, and the United Arab Emirates show clear discrepancies between the declared value of goods exported to Iraq and their actual market prices, suggesting large-scale over-invoicing.
He cited figures from Chinese exports as an example, in the first five months of 2025, Iraq reportedly imported $170 million worth of Chinese footwear and nearly $600 million in clothing. "These figures do not reflect the true demand in Iraq's market nor align with global prices," al-Obaidi stated, adding that this strongly indicates invoice inflation in terms of both volume and value.
According to al-Obaidi, certain parties are exploiting the difference between Iraq's official exchange rate and the parallel market rate. He explained that by inflating invoices, these entities have managed to funnel large sums of money through the official banking channels, bypassing multiple layers of scrutiny designed to verify transfers and ensure they reach legitimate recipients.
Although the Central Bank of Iraq has implemented stricter auditing procedures to control currency outflows, al-Obaidi argued that the current framework has proven ineffective. "The weakness is evident not only in the export data from trading partners but also in Iraq's persistently low customs revenues, which remain disproportionately small compared to the volume of declared imports," he said.
Al-Obaidi called for a new mechanism linking bank transfers to customs duties, under which importers would not be allowed to access the official exchange rate unless they first settle the customs fees based on the declared value of the transfer.
"This approach would achieve two key objectives," he explained, adding that "It would tighten oversight on transfers made at the official rate and increase state revenues by ensuring duties are calculated based on the real value of goods."
However, he acknowledged that such a proposal may face resistance. Critics might argue it risks pushing the dinar further down in the parallel market by tightening access to foreign currency and could be seen as a fiscal intervention rather than a monetary one.
"What Iraq is experiencing today, an uncontrolled drain of foreign currency and a decline in reserves due to unchecked imports, demands exceptional measures, even if they carry side effects," al-Obaidi warned.
He concluded that reforming Iraq's transfer and import systems is no longer optional, but 'an urgent necessity to safeguard economic stability and protect Iraq's foreign currency reserves.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Shafaq News
9 hours ago
- Shafaq News
Water crisis relief: Basra inks deal for desalination project
Shafaq News - Basra On Friday, Basra Governor Asaad Al-Eidani announced the awarding of a seawater desalination project with a daily capacity of one million cubic meters to a coalition of Al-Ridha Group and China's PowerChina, experts in regional water infrastructure. In a statement, the governor explained that the strategic project includes three main components: an advanced reverse osmosis (RO) desalination plant, a dedicated power station to supply the necessary energy, and 240 kilometers of pipelines to transport water to nine key distribution points across the province. 'The goal is to secure a sustainable and high-quality water supply for the people of Basra,' Al-Eidani noted, stressing that 'This project represents one of the most important infrastructure investments in the province's recent history.' The selected Chinese company, El-Eidani added, brings extensive experience in water infrastructure, with more than seven completed projects across the region. These include the Al-Tawila plant in Abu Dhabi—the world's largest reverse osmosis facility with a capacity of 900,000 cubic meters per day—as well as the third phase of the Rabigh project and the Jubail plant in Saudi Arabia, each with a capacity of 600,000 cubic meters per day. 'We chose a partner with a proven track record at this scale,' he noted, highlighting the technical weight behind the selection. This project comes amid Basra continues to face a drinking water crisis compounded by rising pollution levels in both water and air. Since early this year, protests have erupted, especially in northern areas, in response to water scarcity and an increase in respiratory and skin diseases linked to pollution. Additionally, the intrusion of saline seawater into the Shatt al-Arab river has worsened the shortage of potable water and affected agricultural irrigation, further straining the province's already fragile water resources.
Shafaq News
9 hours ago
- Shafaq News
Lebanon's Finance Minister: Iraqi fuel payment ready for transfer
Shafaq News – Beirut/Baghdad Lebanese Finance Minister Yassine Jaber announced, on Friday, that funds owed to Iraq for fuel exports are ready for transfer. In a statement after meeting with Iraq's Chargé d'Affaires in Beirut, Mohammad Redha al-Husseini, Jaber confirmed that the payment is pending action from Iraq's Central Bank to activate the designated financial channel. He noted that the move would simplify transactions and improve access for Iraqi citizens and businesses. The fuel-for-services agreement, signed in July 2021, allowed Lebanon to import heavy fuel oil from Iraq to power its electricity plants in exchange for Lebanese goods and services. The deal was expanded in late 2023, doubling Lebanon's annual fuel quota to two million tons—though Beirut has yet to fully meet its service obligations. Jaber also revealed that a delayed Lebanese ministerial visit to Baghdad is being rescheduled to boost economic ties and advance key infrastructure projects, with the agenda including finalizing a double taxation agreement, restarting the stalled Iraq–Tripoli oil pipeline, expanding fiber-optic infrastructure, modernizing payment systems, and facilitating cross-border movement.
Memri
10 hours ago
- Memri
China Hosts First Trilateral Meeting With Pakistan And Bangladesh, Seeking To Isolate India In Its Own Neighborhood
On June 19, 2025, China hosted its first trilateral meeting with Bangladesh and Pakistan, which was aimed at enhancing trilateral cooperation in trade, investment, health, education, and maritime affairs between the three countries, but also revealing its intent to isolate India in its own neighborhood. The meeting was held in Kunming in Yunnan province of China. Chinese Vice Foreign Minister Sun Weidong, Pakistani Additional Secretary (Asia Pacific) Imran Ahmed Siddiqui, and Bangladeshi acting foreign secretary Ruhul Alam Siddique attended the meeting. Amna Baloch, who is the Pakistani foreign secretary, an official who reports to the foreign minister, participated in the first phase of the meeting via a video link. According to a report in the Indian media outlet Economic Times, Pakistan is strengthening its ties with Bangladesh under the interim administration headed by Nobel Laureate Muhammad Yunus by not only seeking to firm up defense partnership but also to push trade and investment ties.[1] "Since last November [2024], the Chittagong Port has received two ships carrying commercial items from Pakistan and there are attempts to scuttle India's access to the port," the report read.[2] The June 19 meeting: (Left to Right) Bangladeshi Acting Foreign Secretary Ruhul Alam Siddique, Chinese Vice Foreign Minister Sun Weidon, and Pakistani Additional Secretary (Asia Pacific) Imran Ahmed Siddiqui Before August 2024, when Bangladeshi Prime Minister Sheikh Hasina fled to India amid protests, it was not possible for Pakistan to build relations with Bangladesh, the Bangla-speaking eastern region that split from Pakistan in the 1971 War. Although the trilateral forum launched by China appears harmless, it may have strategic implications for India's foreign policy in the region. "The use of trilaterals underscores China's fresh attempts at making Pakistan a stakeholder in the region and keeping New Delhi preoccupied with immediate concerns," foreign policy experts Harsh V. Pant and Aditya Gowdara Shivamurthy wrote recently.[3] In a joint article, the two experts noted that before the regime changes in Afghanistan in August 2021 and in Bangladesh in August 2024, "both countries were staunch supporters of India's fight against both Pakistan and its state-sponsored terrorism. With the change in regimes, however, Pakistan and China have attempted to draw both countries [Afghanistan and Bangladesh] closer to their orbit."[4] While India has built its relationship with the Taliban rulers of Afghanistan recently, China has sought to counter India's influence by hosting another trilateral meet with Pakistan and Afghanistan. On May 21, a month before the trilateral meet involving Bangladesh, Beijing hosted a trilateral meeting attended by Chinese Foreign Minister Wang Yi, Pakistani Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar, and Afghan acting foreign minister Amir Khan Muttaqi.[5] Pakistani Foreign Minister Mohammad Ishaq Dar, Chinese Foreign Minister Wang Yi, and Afghan Taliban acting foreign minister Amir Khan Muttaqi attended the May 21 meeting. An Indian media report noted: "China's role as convenor of this trilateral format also signals Beijing's intent to reshape regional order through alternative multilateral formats to counterbalance India's influence in the region and advance its Belt and Road Initiative (BRI) and regional influence with more flexible, cooperative frameworks."[6] Commenting on India's isolation amid the trilateral platforms launched by China, Harsh V. Pant and Aditya Gowdara Shivamurthy observed: "The developments in the region demonstrate, once again, that China, and not Pakistan, is India's biggest challenge. With both Pakistan and China confronting a confident India, China sees an opportunity to challenge India through the trilateral nexus. At a time when India is seeking support from South Asian countries to fight terrorism, Chinese efforts will create new setbacks. "South Asian countries will thus have to learn to balance between India and China, as Beijing uses Islamabad to create new complexities in the region. On its part, Delhi will have to continue to express redlines and convey the point that any misadventures by its neighbors could have severe economic, military, and political costs."[7]
