There are positives for the KRG in Iraq’s contentious new funding deficit law: MPs
ERBIL, Kurdistan Region – Iraq’s new controversial funding deficit law may have the positive effect of pushing Erbil and Baghdad to collaborate, argued two Kurdish members of Iraqi parliament on Saturday.
Jamal Kochar, a member of parliament from the Kurdistan Islamic Union (KIU) party, stressed that there are more positive aspects to this bill than negative. “If the Kurdistan Region commits to it, then the 2021 budget will be easily paid, if they don’t commit, it will be a heavy burden for us,” the MP told Rudaw’s Hawraz Gulpi in an interview on Saturday.
Iraqi parliament on Thursday morning passed the Fiscal Deficit Coverage Bill, which allows Baghdad to borrow 12 trillion Iraqi dinars ($10 billion) from the Central Bank in an attempt to cover the fiscal deficit and pay civil servants.
While the emergency borrowing legislation passed in a majority vote, a large number of Kurdish MPs stormed out of the session over the requirement for the Kurdistan Region to hand over an unspecified amount of oil revenue to Baghdad in return for its monthly share of the federal budget.
Kochar argued that the decision to repudiate the bill is premature and “far from logical,” noting that the amount of oil Erbil will be required to send is yet to be specified by the State Organization for Marketing of Oil (SOMO), in addition to how much they will receive in return.
The Region’s senior officials are holding a meeting on Sunday to discuss the contentious fiscal bill.
The drop in oil prices and the coronavirus pandemic have exacerbated Iraq and the Kurdistan Region’s economic crisis. Oil revenues fund more than 90% of Iraq's budget.
“There isn’t a quoted sum so far, except for that the Kurdistan Regional Government (KRG) to hands over oil [to Iraq] through the SOMO, the amount isn’t specified,” Salim Shushkayi, an MP for the Kurdistan Islamic Group (Komal) also argued on the same Rudaw program.
However, Shushkayi suggested that the KRG “not hand anything over” to Baghdad before the amount is specified and the dispute is settled, he also suggested borrowing from the private sector and the Regional banks.
The KRG has failed to pay its civil servants on time or in full for months. Kurdish officials have openly said they cannot pay civil servants without money from the federal government.
“The Kurdish people will be the first ones to suffer the consequences” if the KRG doesn’t cooperate with Baghdad, argued the MP.
However, some experts have noted that should the bill’s implementation might be economically devastating for the KRG.
“The new law would increase the KRG deficit to a crushing 73% and leave Kurdish officials far short of meeting their most important obligations: the $710 million in monthly salary and social security payments,” noted Michael Knights, an Iraq analyst and senior fellow at the Washington Institute.
Jamal Kochar, a member of parliament from the Kurdistan Islamic Union (KIU) party, stressed that there are more positive aspects to this bill than negative. “If the Kurdistan Region commits to it, then the 2021 budget will be easily paid, if they don’t commit, it will be a heavy burden for us,” the MP told Rudaw’s Hawraz Gulpi in an interview on Saturday.
Iraqi parliament on Thursday morning passed the Fiscal Deficit Coverage Bill, which allows Baghdad to borrow 12 trillion Iraqi dinars ($10 billion) from the Central Bank in an attempt to cover the fiscal deficit and pay civil servants.
While the emergency borrowing legislation passed in a majority vote, a large number of Kurdish MPs stormed out of the session over the requirement for the Kurdistan Region to hand over an unspecified amount of oil revenue to Baghdad in return for its monthly share of the federal budget.
Kochar argued that the decision to repudiate the bill is premature and “far from logical,” noting that the amount of oil Erbil will be required to send is yet to be specified by the State Organization for Marketing of Oil (SOMO), in addition to how much they will receive in return.
The Region’s senior officials are holding a meeting on Sunday to discuss the contentious fiscal bill.
The drop in oil prices and the coronavirus pandemic have exacerbated Iraq and the Kurdistan Region’s economic crisis. Oil revenues fund more than 90% of Iraq's budget.
“There isn’t a quoted sum so far, except for that the Kurdistan Regional Government (KRG) to hands over oil [to Iraq] through the SOMO, the amount isn’t specified,” Salim Shushkayi, an MP for the Kurdistan Islamic Group (Komal) also argued on the same Rudaw program.
However, Shushkayi suggested that the KRG “not hand anything over” to Baghdad before the amount is specified and the dispute is settled, he also suggested borrowing from the private sector and the Regional banks.
The KRG has failed to pay its civil servants on time or in full for months. Kurdish officials have openly said they cannot pay civil servants without money from the federal government.
“The Kurdish people will be the first ones to suffer the consequences” if the KRG doesn’t cooperate with Baghdad, argued the MP.
However, some experts have noted that should the bill’s implementation might be economically devastating for the KRG.
“The new law would increase the KRG deficit to a crushing 73% and leave Kurdish officials far short of meeting their most important obligations: the $710 million in monthly salary and social security payments,” noted Michael Knights, an Iraq analyst and senior fellow at the Washington Institute.