Iraq’s banks at ‘High Risk’: Economic pressures weigh on financial stability

Shafaq News/ Iraq’s banking system is classified as “high risk” due to ongoing challenges in the country’s financial stability, according to credit rating agency Standard & Poor’s.

In its latest assessment, S&P assigned Iraq’s banking sector to group 10—reserved for the most vulnerable systems—alongside countries such as Nigeria and Ukraine, emphasizing that institutional fragility, weak credit conditions, and macroeconomic imbalances were key factors behind the rating.

“The institutional and economic credit environment in Iraq remains very high risk,” the report said, highlighting limited competitiveness and structural vulnerabilities in the financial sector.

Financial expert and former Central Bank (CBI) official Mahmoud Dagher told Shafaq News that the classification has remained unchanged for years. “Major risks—such as sanctions on banks, difficulties in transfers, and regional instability—continue to weigh on Iraq’s system,” he said.

Dagher also pointed to fiscal issues, including deficits and growing debt, as additional pressures contributing to the country’s stagnant credit outlook.