ERBIL, Kurdistan Region - The finance ministries of the Kurdistan Regional Government (KRG) and the Iraqi government on Thursday traded accusations over Erbil's financial entitlements in the federal budget after Baghdad decided to halt the payment of the Region's civil servants.
Iraqi Finance Minister Taif Sami claimed on Wednesday that the ministry is “unable” to continue financing the Kurdistan Region, alleging that Erbil has exceeded its 12.67 percent budget share set by the 2025 Federal Budget Law.
In an official letter to the KRG, Sami said that Erbil exceeded its allocated share by 13.547 trillion dinars ($10.34 billion), adding that under Iraq’s Federal Supreme Court decisions, further funding in such circumstances is prohibited.
KRG's finance ministry on Thursday responded to Sami.
"The approach your ministry has taken in determining the Kurdistan Region's share violates the Iraqi Constitution; determining the Kurdistan Region's share must be based on collected federal revenues, not actual expenditures," said the ministry.
Hours later, Iraqi finance ministry said in a statement that the KRG has not committed to handing over oil and non-oil revenues, and that it has also not delivered or exported oil from the fields. Therefore, they can no longer send money for salaries for the remaining months of this year.
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023 after a Paris-based arbitration court ruled in favor of Baghdad that Ankara had violated a 1973 pipeline agreement by allowing Erbil to export oil independently.
Iraq’s Federal Supreme Court in February stated in a ruling that the KRG must hand over all the oil and non-oil revenues to Baghdad. In the same month, the KRG stated its readiness to hand over its non-oil income to the Iraqi government in a bid to abide by the federal budget law and prevent obstacles regarding the flow of money from Baghdad.