ERBIL, Kurdistan Region - The Kurdistan Regional Government’s (KRG) finance ministry on Sunday announced it signed a loan contract with Iraqi state-owned Rafidain Bank, hours after Baghdad said it has begun procedures to send the final 700 billion dinar installment of its loan to Erbil to pay civil servant salaries.
At the directive of Iraq’s prime minister, “on Friday… the Ministry of Finance issued letters granting the KRG a loan worth 700 billion dinars to cover the salaries of the Region’s employees,” the Iraqi ministry said in a statement.
This is the third and final installment of a 2.1 trillion Iraqi dinar loan the federal government agreed in September with the KRG to cover three months of payroll after public sector employees in the Region went unpaid for nearly 90 days.
Civil servants in the Kurdistan Region have yet to be paid their salaries for the months of September, October, or November. The latest 700 billion dinar installment of the loan will cover the salaries for September.
Baghdad’s sending of the final payment has sparked concerns among civil servants about how they will be paid for October, November, and December.
The KRG has yet to announce receiving the third installment of the loan, but its finance ministry on Sunday reported signing a contract for a loan worth 250 billion dinars from Rafidain Bank.
The KRG has repeatedly claimed that it needs over 900 billion dinars per month to pay civil servant salaries.
The frequent delay in paying salaries, which has been an issue for the cash-strapped KRG for nearly a decade, has exacerbated the concerns of civil servants, many of whom have no other source of income.
Frustrated teachers in several parts of the Kurdistan Region have been on strike since September, demanding salaries be paid regularly, every month.
Under Erbil and Baghdad’s September loan agreement, the KRG’s share in the 2023 federal budget will be used to pay back the loans. If Erbil’s share is not enough to cover the loans, its dues will be settled using its allocations within the 2024 budget.
CORRECTED: The tile of this piece initially read "KRG, Iraqi bank strike new loan deal as Baghdad sends final installment"
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