Baghdad to pay 618 billion dinars for KRG salaries

ERBIL, Kurdistan Region - Iraq's federal government will pay 618 billion dinars to cover for the salaries of Kurdistan Region’s civil servants. The payment is Erbil’s share from the budget and not a loan, a government minister told Rudaw on Sunday.

The cabinet convened on Sunday ahead of the Prime Minister Mohammed Shia’ al-Sudani’s trip to Switzerland to attend the annual World Economic Forum in Davos. Justice Minister Khalid Shwani, who attended the meeting, told Rudaw’s Halkawt Aziz that the cabinet approved a plan to send the Kurdistan Regional Government (KRG) 618 billion dinars to cover its payroll.

Shwani said the amount approved by Baghdad is not a loan, but the share of Erbil from the 2024 budget.

The media office of PM Sudani confirmed the allocation of the funds in the summary of the cabinet meeting. The allocated sum is for the month of January and is derived from the "actual spending" outlined in the 2024 federal budget.

The phrase “actual spending” in the budget law describes the amount of money Iraq spent or earned throughout a specific fiscal period. 

The mechanism surrounding the distribution of the funds are yet to be clarified.

Jassim al-Umairi, the head of the Iraq’s Federal Supreme Court, told Iraqi state media (INA) on Sunday that the civil servants of the Kurdistan Region must not be affected by the Erbil-Baghdad issue.

“It is necessary that problems should not arise as a result of the KRG not implementing what the budget law has mandated, causing a delay in receiving salaries for employees and retirees in the Region. They [KRG civil servants] are also a part of the Iraqi people, and the federal government must work on solving this issue,” Umairi noted, stressing the need for a “radical solution” for the salary issue.

The KRG has said that it needs over 900 billion dinars monthly to cover its payroll, but with its oil exports through Turkey halted since March, it does not have the funds. In September, Erbil and Baghdad struck a deal that saw the federal government agree to loan the KRG 2.1 trillion Iraqi dinars in three 700-billion-dinar instalments, to cover three months of the wages of the civil servants.

The two governments have since been in talks to amend the federal budget in order to guarantee the payments to cover the salaries. A KRG delegation headed by Finance Minister Awat Shekh Janab travelled to Baghdad last week and government said the talks were “positive” and Erbil has “fulfilled” its obligations.

Kurdistan Region Nechirvan Barzani was in Baghdad this weekend. He met with Sudani where “a serious discussion was held regarding the steps taken by the KRG and the federal government to resolve the issues of budget, employee salaries, resumption of Kurdistan Region’s oil exports and several other administrative, financial, and economic topics.”

During a speech at a ceremony of commemoration of influential Shiite cleric Mohammed Baqir al-Hakim on Saturday, Barzani said that “Due to the lack of budget and salary in the Kurdistan Region, employees and citizens live in a very dire situation. This has negatively affected all sectors in the Kurdistan Region.”

Updated at 9:53 pm with the comments from head of the Federal Supreme Court