Iraqi dinars will be sole currency allowed for financial contracts: Council of Ministers

ERBIL (Kurdistan 24) – The Iraqi Council of Ministers decided on Tuesday that contracts executed within Iraq shall be denominated in Iraqi dinars, except those entered into through external, bank-issued “documentary credits” based on the terms agreed between the parties.

A comprehensive list of past state contracts originally denominated in US dollars will be compiled by the Ministry of Planning. The compiled list will be forwarded to the Ministry of Finance and the Central Bank of Iraq.

A maximum monthly limit will also be established by the Ministry of Planning for the coverage of contracts in US dollars, with the Central Bank of Iraq ensuring coverage at an exchange rate of 1,320 dinars per US dollar. In order to facilitate monthly payments for these contracts, the funds will be deposited into the Ministry of Finance's account in accordance with the necessary release controls.

Iraqi borrowers from government banks who have taken loans in US dollars are now required to repay their loans in Iraqi dinars. These loans will be covered by the Central Bank of Iraq in US dollars, which will then compensate the lending banks. This process applies exclusively to loans issued prior to the issuance of the Council’s decision.

During the past year, a devaluation of the Iraqi dinar value took place after measures were taken by the United States in late 2022 to stamp out money laundering and the channeling of dollars to Iran and Syria. At the time, the Iraqi dinar’s street value plunged to an exchange rate of nearly 1,750 dinars per US dollar.