Chapter

IRAQ

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
Share
  • ShareShare
Show Summary Details
Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Iraq is the Iraqi dinar.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe Iraqi dinar is pegged to the dollar, the intervention currency. The exchange rates are set by the Central Bank of Iraq (CBI). The CBI undertakes transactions in the listed currencies only with authorized dealers.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with foreign countries normally must be made in any of the listed currencies or in Iraqi dinars from a nonresident account, provided that the funds in the account were obtained originally through credits in any one of the listed currencies. Payments to and receipts from Israel are prohibited.
Payment arrangementsn.a.
Administration of controlExchange control authority is vested in the Board of Administration of the CBI. Certain approval authority has been delegated to the Department of Foreign Exchange and Banking Supervision of the CBI and to licensed dealers. Foreign exchange transactions must take place through a licensed dealer unless otherwise authorized by the governor of the CBI. Branches of the Rafidain Bank and the Rasheed Bank are licensed dealers. The Ministry of Trade (MOT) formulates import policy and the annual import program.
International security restrictions
In accordance with UN sanctionsYes.
Payment arrearsn.a.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeResidents and nonresidents may bring into Iraq, free of customs duty, worked and un-worked gold, regardless of its weight, provided that they declare it upon importation. Residents may take out with them worked gold not exceeding five grams a person, subject to declaration; such gold may be brought back on their return to the country. Nonresident Iraqis are allowed to take out worked gold that they brought with them for personal use.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe maximum amount allowed is ID 5.
On imports
Domestic currencyAmounts up to ID 1,000 are allowed.
Foreign currencyTravelers may bring in foreign exchange, including currency notes (other than Israeli currency), in unlimited amounts, provided that they declare the funds on an exchange control form; amounts not intended to be taken out of the country are exempt from declaration.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResident Iraqis and resident nationals of other Arab countries are allowed to open foreign currency accounts at the commercial banks and to use the balances in these accounts without restriction, provided the accounts have been credited with foreign banknotes.
Held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedNonresident Iraqis and nonresident nationals of other Arab countries are allowed to open foreign currency accounts at the commercial banks and to use the balances in these accounts without restriction, provided the accounts have been credited with foreign banknotes. Nonresident accounts are divided into ordinary nonresident accounts, which involve current payment transactions, and special nonresident accounts, which involve capital transfer transactions. Balances on these accounts and any applicable interest are freely transferable abroad in foreign currencies, provided that the funds have been deposited with licensed dealers within three months of transfer. Iraqi nationals residing abroad (or their legal representatives) may withdraw from their nonresident accounts up to ID 100,000 a year in three installments to cover personal expenses in their country of residence. For all other cases, approval is required.
Approval requiredYes.
Domestic currency accountsNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetYes.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Import licenses used as exchange licensesThe Rafidain Bank or the Rasheed Bank provides foreign exchange upon presentation of the exchange control copy of the import license, except in some instances when reference must be made to the CBI.
Import licenses and other nontariff measuresImports are restricted by UN sanctions. Licenses are issued in accordance with an annual import program. Imports of all goods from Israel are prohibited. All private imports are subject to licenses, except imports of materials constituting basic elements for development projects.
Negative listImports of some commodities on a protected list are, in principle, prohibited from all sources.
Import taxes and/or tariffsTo finance the Export Subsidy Fund, a tax of 0.5% is levied on imports of capital goods, and a tax of 0.75% is levied on imports of consumer goods. All imports subject to import duty are also subject to a customs surcharge. Foreign companies implementing development projects in Iraq are exempt from all import duties and domestic taxes accruing from the implementation of these projects, including income taxes due on the earnings of their non-Iraqi workers.
State import monopolyImports of commodities are normally handled by the public sector.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsExporters of 13 goods manufactured by firms in the public sector must repatriate 60% of their foreign exchange proceeds through the Rafidain Bank or the Rasheed Bank and surrender them within two months of shipment. Other exporters may retain their export proceeds in a foreign exchange account with the commercial banks for three years and use them to pay for licensed imports.
Financing requirementsNo.
Documentation requirementsn.a.
Export licensesExports are restricted by UN sanctions. All exports to Israel and exports of certain goods to all other countries are prohibited. The MOT may prohibit the exportation of any commodity when supply falls short of domestic demand. All exports are licensed freely through the General Company for Exhibitions and Trading Services.
Export taxesn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll payments for invisibles require permission.
Trade-related paymentsInformation is available only for the payment of freight and insurance. Foreign exchange is not granted to merchants to purchase insurance abroad for their exports.
Prior approvalYes.
Payments for travel
Quantitative limitsThe basic allowance for travel to Arab countries, Cyprus, Greece, and Turkey is ID 300 a person a trip for travelers 18 years of age or over (ID 50 for persons under 18 years); the basic allowance for other countries is ID 500 a person a trip for travelers 18 years of age or over (ID 250 for persons under 18 years).
Personal paymentsInformation is available only for payment of medical and study abroad costs.
Prior approvalYes.
Quantitative limitsStudents abroad are allocated a fixed amount in Iraqi dinars to be transferred to the country of their residence, except for certain countries, such as India; the Baltic countries, Russia, and other countries of the FSU; and countries in North Africa, where students are paid a fixed amount in dollars.
Foreign workers’ wagesThe Rafidain Bank and the Rasheed Bank are permitted to transfer salaries of teachers who are nationals of Arab countries employed by the Ministry of Higher Education, and of scientific researchers and medical doctors, in accordance with the terms of their contracts.
Prior approvalYes.
Quantitative limitsCertain nonresident private sector workers who have contracts with public institutions in Iraq are permitted to transfer the amounts provided for in those contracts. Those not employed under contracts may transfer abroad a monthly amount of ID 10 a person if not insured and ID 20 a person if insured and working in the private sector. Skilled noncontractual workers employed in the nationalized sector by the government are entitled to ID 40 a person a month. Persons under 16 years or over 55 years of age, however, are not allowed to transfer their earnings abroad.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsForeign exchange receipts in excess of ID 100 must be surrendered to a licensed dealer within three months.
Restrictions on use of fundsn.a.
Capital Transactions
Controls on capital and money market instrumentsMost capital transactions effected abroad by residents, whether Iraqis or foreign nationals, require prior approval.
On capital market securities
Shares or other securities of a participating nature
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase abroad by residentsYes.
On money market instruments
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsYes.
Controls on credit operations
Commercial creditsYes.
Financial creditsYes.
Guarantees, sureties, and financial backup facilitiesYes.
Controls on direct investment
Outward direct investmentAll investments effected abroad by residents, whether Iraqis or foreign nationals, require prior approval.
Inward direct investmentNo foreign (defined as non-Arab) participation is allowed in the capital of private sector companies, but citizens of other Arab countries may participate with Iraqis in projects in the industrial, agricultural, and tourism sectors; participation is encouraged by the Arab Investment Law. The law permits (1) Iraqi investors to hold up to 49% of an enterprise, provided that their contribution and profits be paid in Iraqi dinars and that the minimum capital of the enterprise is ID 0.5 million; (2) Arab investors to transfer annually up to 100% of the profits distributed to them, but not exceeding 20% of their paid-in capital; and (3) nationals of Arab countries to bring capital into Iraq in Iraqi currency for industrial and agricultural investments. Arab investors are allowed to transfer capital in a convertible currency through a licensed bank or physical assets that will be used in the enterprises they are planning to establish, provided that used machinery and equipment have at least one-half of their productive life left.
Controls on liquidation of direct investmentYes.
Controls on real estate transactions
Purchase locally by nonresidentsYes.
Controls on personal capital movements
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Transfer of assets
Transfer into the country by immigrantsYes.
Provisions specific to commercial banks and other credit institutionsYes.
Investment regulationsYes.
Open foreign exchange position limitsYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsn.a.
Changes During 1999
No significant changes occurred in the exchange and trade system.

    Other Resources Citing This Publication