SULAIMANI, Kurdistan Region — The Kurdistan Regional Government (KRG) is struggling to meet its obligation of paying civil servants on time due to the ongoing halt in the Region’s oil exports, which has now stretched for nearly 50 days.
The Ministry of Finance and Economics in the Region recently released a schedule for payday, indicating a further ten-day delay for the already overdue April payments.
After a recent agreement between Erbil and Baghdad, the Iraqi Finance Ministry transferred 400 billion dinars to the Kurdistan Region, raising hopes among employees that they would receive their salaries promptly. However, the payday schedule revealed that the first payment for April will commence on May 14 and conclude on May 31, extending the delay by more than 10 days.
The Kurdistan Region heavily relies on oil revenues to fulfill its obligation of paying civil servants. Unfortunately, Turkey has halted the oil exports following an arbitration ruling that favored Iraq over Turkey regarding the shipment of oil through Ceyhan port. The ruling stated that Turkey violated an agreement with Iraq dating back to 1973. According to Reuters, this ruling has resulted in a loss of over $1 billion for the Region.
To compensate for the shortfall in oil revenues, the KRG’s Ministry of Finance depends on domestic revenues generated through customs and taxes.
According to an agreement between the ruling parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), each of the three provinces in the Region is responsible for collecting their own domestic revenues and has the authority to use it to cover the shortfall in civil servants’ payments.
The Kurdistan Region requires over 900 billion dinars for salary payments each month, while domestic revenues amount to just over 350 billion dinars.
Additionally, the United States provides 26 billion dinars in financial support to the Peshmerga forces as part of its assistance in the fight against ISIS.
Based on these figures, it is evident that the Region still requires additional funds to meet its obligation of paying civil servants. Ministry officials have expressed hope that the Iraqi Finance Ministry will transfer another 400 billion dinars next week.
As a result of the financial crisis in the Region, civil servants have faced salary delays and reductions for the past nine years. The recent agreement between Erbil and Baghdad is highly anticipated by civil servants as a potential resolution to the issues surrounding their financial entitlements.
