Fiscal Year 2025
Capacity Development Activities
Financial Supervision and Regulation
Developing and implementing the Basel Framework Pillar 2 Supervisory Review Process
To strengthen the Central Bank of Iraq (CBI) supervisors’ capacity in Basel Framework Pillar 2 and ensuring banks have sufficient capital and liquidity to support all the risks in their business, a METAC mission met six CBI participants in Amman, Jordan, during 24-28 June. The mission focused on enhancing the CBI supervisors' understanding of the supervisory review process (SRP) and internal capital adequacy assessment process (ICAAP). The mission team presented and discussed the purpose, key components, and regulatory aspects along with implementation strategies.
Public Financial Management
Implementing the Treasury Single Account (TSA)
The third workshop to advance the implementation of the TSA in Iraq was organized by FAD/METAC, in collaboration with the Ministry of Finance of Iraq, during the period July 24-27 in Amman (Jordan). Building on the outcome of the second workshop in March 2024, the event gathered 13 core members from the “TSA Implementation Committee”, formed by key stakeholders including the Ministry of Finance (MoF), Central Bank of Iraq (CBI), and four State-owned banks (SOBs). The mission discussed the progress made in the implementation of the TSA roadmap and the key challenges encountered over the past few months. Participants actively engaged in discussions and agreed actions to be implemented until October 2024, including advancing the TSA design and concept note, developing a database for TSA bank accounts, and designing portals for data collection as an interim step while the roll out of the core banking system in the largest two SOBs is completed.
Revenue Administration
Strengthening the Self-Assessment System to Enable Taxpayers to Fulfill their Tax Obligations.
Recognizing the importance of shifting the responsibility for calculating tax liability from tax administrations to taxpayers, this mission assisted the Iraqi General Commission of Taxes (GCT) during 13-16 July in strengthening the supportive framework for the Self-Assessment (SA) system. During this off-site mission, the mission team evaluated GCT’s existing SA mechanism and identified key improvements. This mission is part of a complex transition to an SA system that would enable most taxpayers to voluntarily fulfill their tax obligations, representing a significant change in the way the tax administration conducts its operations. The Iraqi delegation presented a token of appreciation for METAC which represents the main historic Iraqi cities:
Draft Implementing Regulations for the Iraq General Authority of Customs Law Review
A hybrid follow-on mission during 1-20 May for the Iraq General Authority of Customs (GAC) Law Review developed (remotely) and validated (in-person) two draft implementing regulations to be approved by the Director General of GAC: (i) a circular on Post Clearance Audit and (ii) an instruction on temporary exports (and re-imports) of goods. The mission also agreed that ‘Customs Valuation’ will be the next mission priority.
Macroeconomic Frameworks
Improving the Central Bank’s Projections by Incorporating High-Frequency Data
The mission team supported a core team at the Central Bank of Iraq during 9-13 June to incorporate high-frequency data in the Macroeconomic Forecasting Tool (MFT) to ensure the timely updating of the current year's estimates and improve the forecast set. The MFT is a multi-sectoral model that can capture endogenous economic responses of scenarios, such as oil price fluctuations. The baseline projection, alternative scenarios, and formulation of year-on-year forecasts are now based on quarterly forecasts rather than historic figures or personal judgment. The mission team underscored the critical role of developing fiscal policy scenarios and determining an adequate level of foreign reserves buffers.
