KRG to make more salary cuts in 2018 after losing Kirkuk oil

ERBIL, Kurdistan Region – The KRG has planned to reduce the salaries of high-earners by as much as 33 percent after a dramatic drop in revenue with the loss of Kirkuk’s oil fields, a government source told Rudaw

The government’s income has decreased from $565.5 million a month to $337.4 million, a 40 percent drop.

The new pay cuts will affect those who were skipped during a previous round of salary reductions as part of unpopular austerity measures in 2016.

The KRG will reduce “by a percentage” salaries of the security forces, including Asayesh and police, the source said.

Rank and file Peshmerga will not be affected, but commanders with high salaries will see their income cut by “33 percent.”

Ministers at a KRG cabinet meeting headed by Prime Minister Nechirvan Barzani on Monday discussed forecasts for oil and non-oil revenues for the first half of 2018.

The cabinet, following the discussion of two reports from the Region’s Ministry of Natural Resources and the Ministry of Finances, decided that public sector salaries will be “the priority,” but did not release any revenue figures.

The KRG will announce the new salary reductions in the future, the source explained.

Under the salary system introduced in 2016, most of the public employees saw their wages reduced by as much as 40 percent in some cases.

The KRG was on the road to financial recovery before the October events, mainly because of higher oil prices, and KRG officials promised to make changes so that employees would receive higher portions of their salaries.

The financial crisis, sparked by Baghdad’s budget cut in early 2014, was made worse by the high cost of the war with ISIS.

Kurdish oil exports now stand at about 250,000 bpd, down from an estimated 550,000 bpd in early October. It is much lower than the goal of 700,000 bpd by the end of 2017 or early next year.

The government has also increased taxes and fees on many basic services like new car registration and real estate purchases. These were introduced as part of efforts to collect more non-oil revenue.

The government also hoped that its biometric payroll system would help to decrease its payroll by weeding out ghost employees and double-salary recipients.

If the KRG were to pay the full salaries of its 1.2 million employees, it would need $772 million monthly.