Iraqi, Kurdish parties reach preliminary agreement on budget amendments

ERBIL, Kurdistan Region - Iraqi and Kurdish parties reached a preliminary agreement over the Kurdistan Region’s share in the federal budget amid rows over controversial amendments made to articles in the bill, a spokesperson of a party within the Shiite Coordination Framework told Rudaw on Tuesday. 

The representatives of Iraqi and Kurdish parties in the State Administration Coalition met on Monday in Baghdad to discuss the changes made by the finance committee of the Iraqi parliament last week.

“In the meeting, a preliminary agreement was made regarding both Articles 13 and 14 of the budget bill that concern Kurdistan Region’s share in the federal budget,” Ali al-Defai, the spokesperson of the Supreme Islamic Council of Iraq, a member of the Shiite Coordination Framework, told Rudaw’s Hastiyar Qadir. 

“Only the final draft of the changes agreed upon remains,” he added.

Iraqi parliament’s finance committee on Thursday amended two articles from the federal budget prompting the Kurdistan Regional Government (RG) to blast the “unconstitutional” amendments, labeling them as violations of agreements previously agreed by Erbil and Baghdad.

The amendments under dispute relate to establishing Iraq’s State Oil Marketing Organization (SOMO) as the responsible party for selling the Kurdistan Region’s oil, decreasing the time for Erbil to pay off its debts from seven years to five, creating an account for the Region's oil revenues in the Iraqi central bank, and granting the finance minister the power to authorize the Region's prime minister to make withdrawals from that account. In the previous draft, that power was held by the Iraqi prime minister, Mohammed Shia’ al-Sudani.

According to Defai, under the newly reached agreement, the KRG and the federal government will cooperate to sell the Region’s oil through SOMO.

In the previous amendment, Iraq’s Finance minister had the authority to deal with the revenue in the joint bank account, and KRG would hand 400 thousand barrels daily to SOMO, who will decide to whether export the oil or transfer it to the domestic refineries.

The Iraqi government was scheduled to convene last Saturday to vote to pass the budget bill, but due to the disputes between Erbil and Baghdad, the session was indefinitely suspended.

The 2023 budget includes a record $152 billion in spending, 12.6 percent of which is allocated for the Kurdistan Region.

The State Administration Coalition is an alliance of Shiite, Sunni, and Kurdish political parties in Iraq that successfully broke the political deadlock that suffocated the country and left it without a government for over a year. The coalition-backed Iraqi Prime Minister Mohammed Shia’ al-Sudani and voted to elect his cabinet in October of last year.

Financial matters are a frequent source of tension between Erbil and Baghdad. Erbil says it regularly does not receive its entitled share of federal funds and Baghdad opposes Kurdistan Region’s independent oil sales.

In March, the Iraqi government approved the federal budget bill for 2023, 2024 and 2025 after being left without a budget law in 2022 amid the political instability which followed the 2021 election. The lack of a budget jeopardized the oil-dependent economy with Baghdad prevented from taking advantage of soaring oil prices following Russia’s invasion of Ukraine to combat poverty and bring much-needed economic stability.