KRG finance minister says domestic revenue is not enough for salaries

ERBIL, Kurdistan Region - The Kurdistan Regional Government’s (KRG) finance minister said on Monday that the Region’s domestic income is not sufficient to pay the salaries of public servants, as a Kurdish delegation is in Baghdad for another round of talks with the federal government. 

“We cannot provide salaries with domestic revenues,” Awat Sheikh Janab, the KRG’s finance minister told reporters in the town of Kifri.

Janab said that oil revenues provided 80 percent of the public servant salaries, and that the remainder was raised from domestic income. 

“According to the budget law, we can only receive 50 percent of the domestic income, and we don’t have the oil revenue,” he said, adding that the KRG is in talks with Baghdad to resolve issues related to the oil and non-oil revenues.

Janab’s comments come as a KRG delegation visits Baghdad on Monday to meet with the federal government to discuss the issues in providing public servant salaries, the Region’s share in the budget, and oil revenues.

Disputes remain between both sides on the amount the KRG should handover, with Baghdad insisting it should be the entirety. 

The Iraqi parliament in June passed a budget of $153 billion, the country’s largest bill in monetary value, for 2023 with the same budget allocations set to be followed in the next two years as well. Out of this, 12.6 percent of the budget is allocated for the Kurdistan Region.

According to Article 12 of the federal budget law, the KRG is obliged to hand over the non-oil revenues to the federal government. A 2019 financial management law states that the financial supervision board of both sides will audit the information.

“A problem in the financial administration law is that it does not specify what federal and non-federal revenue is,” Khalil Doski, a member of the finance committee in the Iraqi parliament told Rudaw’s Hastyar Qadir.

Article 29 of the financial administration law states that the provinces, including the Kurdistan Region provinces, are given 50 percent of the federal tax and customs revenues, but that does not include the border crossing points.  However, the federal budget law states that 50 percent of the revenues of the border points should go to the province where it is located.

“The financial administration law is a permanent law, it is stronger than the budget law which is temporary,” Soran Omar, a member of the Iraqi parliament told Rudaw.

A Paris arbitration court in late March ruled in favor of Iraq against Turkey for allowing the independent oil sales of the Kurdistan Region in 2014. The decision resulted in halting the oil exports, leaving the Region stripped of the majority of its revenues.

Baghdad and Erbil signed a deal to resume the exports of the Kurdistan Region’s oil. But, exports are yet to resume despite the agreement. Turkish President Recep Tayyip Erdogan said earlier this month that issues between the KRG and the federal government are the reason for the ongoing halt. 

Last week, Basim Mohammed Khudair, the Iraqi oil ministry’s undersecretary for extraction affairs, rejected Erdogan's claims reiterating that Erbil and Baghdad are on the same page regarding the resumption of exports.

The federal budget law obliges the KRG to sell 400,000 barrels of crude oil through Iraq’s national oil marketing body and if the suspension of exports continues, Iraq will take Kurdish oil for its internal use.