3.51 AM Friday, 19 April 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:32 05:49 12:21 15:48 18:47 20:04
19 April 2024

Iraq allows banks LoCs up to $4m

By Agencies

Iraq's Central Bank has authorised the private banks to handle international payments and foreign currency letters of credit worth up to $4 million (Dh14.69m) each, for the first time in years, the finance minister said yesterday.

Iraqi private banks, which now number 30, were previously allowed to handle letters of credit worth only up to $1m, Bayan Jabor told a banking conference in Baghdad.

Most of the letters of credit are being handled by the state-run Trade Bank of Iraq (TBI), and Jabor said the bank had issued some $9 billion letters of credit in 2008 for the public sector.

Iraq will also soon issue its first new government bonds since the fall of dictator Saddam Hussein for $5bn, Jabor said.

"For the first time, we will soon issue government treasury bonds, worth about $5bn," he said.

"These bonds will be guaranteed by the government of Iraq through the huge assets Iraq owns, which reach to tens of billions dollars, guaranteed by limitless crude and gas reserves, guaranteed by the promising Iraqi economy."

Jabor did not give a specific time frame to issue the debt. Iraq, which gets nearly all its revenues from oil exports, had a large budget surplus in 2008 when oil prices were high, but faces a deficit in 2009 despite revising its spending plans down to $62bn from $80bn as oil prices fall.

The government is in need of funds to pay for investment, not least to boost oil exports and increase future revenues. Although about $66bn of the country's Saddam-era debt has been forgiven, it still owes billions.