EBRD and EU Strengthen Trade Finance in Iraq with $25 Million Bank Facility

EBRD Provides $25 Million Trade Finance Facility to Bank of Baghdad

The European Bank for Reconstruction and Development (EBRD) is expanding its support for Iraq’s banking sector with a trade finance facility of up to US$25 million (€21.3 million) for Bank of Baghdad.

The facility is designed to support international trade by helping the Iraqi bank increase import and export transactions and expand its network of correspondent banking relationships. The initiative is being implemented under the EBRD’s Trade Facilitation Programme (TFP).

For Iraq, improving access to trade finance is particularly important for companies that depend on cross-border payments, imports and exports. The EBRD says the facility will also help address existing trade finance gaps and improve access to financing for micro, small and medium-sized enterprises (MSMEs).

Supporting Iraqi Businesses and International Trade

Trade finance allows companies to manage the financial risks associated with international transactions, including payments, guarantees and short-term working capital.

The new EBRD facility is therefore intended to strengthen commercial links between Iraqi businesses and regional and international markets. Increased access to trade finance could be particularly relevant for smaller companies, which can face greater difficulties obtaining financing for cross-border transactions than large corporations.

The programme also aims to expand Bank of Baghdad’s correspondent banking relationships. These relationships are important for connecting domestic banks to international payment and trade networks.

For European financial institutions and companies, stronger banking links can also make it easier to assess and conduct business with counterparties in Iraq.

EU Support Goes Beyond Financing

The initiative combines EBRD financing with technical cooperation and European Union-backed training.

EBRD-funded technical cooperation will provide advisory assistance, specialised training and workshops covering trade finance. Employees of Bank of Baghdad will also have access to the EBRD’s Trade Finance e-Learning Programme.

The European Union will finance a dedicated training curriculum covering core and advanced banking competencies. The programme also includes a specific focus on financial inclusion, including improving access to financial services for underserved groups and women.

This combination of financing and institutional development reflects a broader approach to banking-sector development: strengthening the capacity of financial institutions while simultaneously increasing access to financial services.

Bank of Baghdad Plays a Key Role

Bank of Baghdad is one of Iraq’s three largest private-sector banks. According to the EBRD, it had US$2.2 billion in total assets at the end of 2025 and operated 35 branches across Iraq.

The bank is listed on the Iraq Stock Exchange and is majority-owned by Jordan Kuwait Bank, which is part of KIPCO, a major regional financial group.

The size and regional connections of Bank of Baghdad make it an important channel for expanding trade finance and strengthening links between Iraqi businesses and international markets.

EBRD Expands Its Presence in Iraq

The agreement is also significant because the EBRD only began operations in Iraq in September 2025.

The development bank says its work in the country focuses on private-sector development, improving access to finance, supporting entrepreneurship and encouraging sustainable long-term economic growth.

The EBRD’s involvement adds another European-backed financial institution to Iraq’s economic development landscape. The EU, meanwhile, remains the largest provider of official development cooperation to Iraq, with economic diversification, investment, trade and social development forming important parts of the EU-Iraq partnership.

Why Iraq Trade Finance Matters for Europe

The expansion of trade finance in Iraq is relevant beyond the domestic banking sector. Better access to international banking networks can support the development of cross-border trade and create stronger links between Iraqi companies, regional markets and international financial institutions.

For Europe, this fits into a wider effort to support economic diversification and private-sector development in neighbouring regions. Strengthening banking capabilities can also provide a foundation for greater financial inclusion and more formal economic activity.

The new US$25 million facility is therefore more than a single banking transaction. It combines trade financing, correspondent banking development, professional training and financial inclusion – areas that could contribute to the gradual modernization of Iraq’s financial sector.