Iraq’s young and growing population presents significant economic potential, but the country’s banking system remains fragile and heavily dominated by state-owned banks, which hold around 90% of sector assets. Access to credit is limited, contributing only 19.4% to GDP in 2023, with most banks focused on serving large corporations and government entities. Additionally, since 2023, Iraq has banned 22 local commercial banks from conducting transactions in US dollars, leading to a depreciation of the exchange rate on the parallel market.

In efforts to stimulate economic diversification, Iraq established a Development Fund aimed at financing key projects. The federal budget for 2023-2025 includes significant spending increases, with USD 162 billion allocated in 2024, focusing on infrastructure improvements, healthcare, education, and electricity services.