Government officials and economic experts praised a new decision by the Iraqi cabinet's economic committee to increase the reserves of the Iraqi Industrial Bank from 25 billion to 150 billion dinars.
The committee reached an agreement on the decision during its 21st session on Tuesday (August 9th). According to a statement released by committee members, the infusion of capital aims to revitalize the country's industrial sector and stimulate the national economy.
The statement said the committee would issue instructions to facilitate the process of granting loans to the private sector and to guarantee the repayment of loans.
"We need to see the specialized banks going back to work," said Mudher Mohammad Salih, an adviser at the Iraqi Central Bank. "But their return would only be possible with good capital to spur the industrial activity into operation again."
Salih told Mawtani that Iraq now has 30,000 industrial projects, such as government factories or companies, which used to employ about 800,000 people. However, most of these companies have no capital and ceased operation.
"Here, the importance of increasing the Iraqi Industrial Bank's capital becomes clear in terms of employment of the workforce, in addition to the positive effects on other aspects of the industrial sector," Salih said.
Located in Baghdad, the Iraqi Industrial Bank is a government institution that has provided loans since 1941 to the country's industrial sector and subsidized various projects across the nation. It has branches in most Iraqi provinces.
However, most of the industrial factories in Baghdad and other provinces are currently idle and in need of financing, said Salman al-Musawi, a member of the Iraqi parliament's economic and investment committee. He added that the increase in the bank's capital and lending power will greatly help in reviving these factories and the industrial sector as a whole.
"We had suggested that the increase be 300 billion dinars, but approval was given to 150 billion dinars only. However, we hope we can reach the desired increase soon," al-Musawi told Mawtani.
"We have the complementary budget for next year, and there are increases in oil prices. An idea was also suggested for the investment of 20% of the surplus coming from oil prices and oil production to support the industry," he said.
Economic expert Majid al-Soory said the Industrial Bank badly needs the cash infusion, "but this increase is too little for a development-oriented bank".
"According to the plans drafted by the Central Bank, it is likely to raise the capital of all development banks to 250 billion dinars next year," al-Soory told Mawtani.
He also called for an increase in capital for all of the country's development banks in order to implement the government's projects and boost the private industrial sector, maintaining that such enhanced development will encourage foreign investment.
"It is possible these funds will bring in five or six times their amounts in Arab and foreign investments."