The ongoing salary crisis faced by employees in the Kurdistan Region has persisted for months, leading to frustration within both popular and political spheres. Despite numerous negotiations between Baghdad and Erbil, a resolution appears increasingly elusive.
Ahmed Al-Hajj Rashid, a former Finance Committee member, expressed skepticism regarding any substantial resolution to the Kurdistan salary crisis. He underscored that the situation is likely to recur every month due to the regional government’s failure to remit 50% of its internal revenues.
In a recent interview, Rashid stated, “This issue will be renewed monthly, with each delegation’s visit failing to yield anything beyond temporary solutions.”
He elaborated on the root of the problem, attributing it to the Kurdistan Regional Government’s inability to uphold the terms of the bilateral agreement with Baghdad. The government’s delay in transferring its internal revenue share for over six months has exacerbated the plight of Kurdish citizens.
Rashid further noted, “There is little hope for a long-term solution; the crisis will remain reliant on temporary fixes.”
Reports indicate that the Kurdish delegation currently in Baghdad has not made any significant progress regarding the salary crisis. Sources mentioned that the delegation has not engaged with Federal Finance Minister Taif Sami as initially planned.
The high-ranking Kurdish delegation, which includes Finance Minister Awat Sheikh Janab, Prime Minister Omid Sabah, and Secretary of the Council of Ministers Amang Rahim, arrived in Baghdad to address pressing financial matters, particularly the salaries of regional employees.
Recent tensions between Baghdad and Erbil have surfaced, characterized by conflicting data surrounding salary disbursements. As of now, salaries for December 2024 remain unpaid, with the Federal Ministry of Finance stating that all Kurdistan’s allocated funds have been sent, while Erbil contends that it has received approximately 800 billion dinars less than necessary, hindering salary distributions.
On January 16, the Kurdistan Regional Government proposed that its internal revenues be transferred to the federal government in exchange for accessing the full benefits of the federal budget rather than solely salaries. This proposal emerged during a meeting with international representatives.
Furthermore, the salary crisis coincided with President of the Kurdistan Region Nigervan Barzani’s visit to Baghdad on January 12, during which he met with Prime Minister Mohammed Shia Al-Sudani and leaders of the State Administration Alliance. While the visit aimed to tackle the salary impasse, it also sought to address broader issues concerning resource management and the financial framework between the two governments.
Barzani urged amendments to the budget law to ensure equitable distribution of funds and secure salaries for employees. The Region is entitled to 21 trillion dinars from the federal budget, yet halted oil exports have restricted transfers solely to salaries. The federal government insists it has fully funded the region, while Erbil argues the actual disbursements have been significantly lower.
Employees in Kurdistan have faced ongoing financial crises over the years, causing market stagnation due to delayed salary payments and the enforced savings system established by the regional government. This financial strife is compounded by earlier austerity measures and persistent disagreements related to budget allocations between Baghdad and Erbil.
On January 11, the Parliamentary Finance Committee confirmed the absence of consensus on proposed amendments to Article 12 of the Budget Law concerning costs related to oil production and exports from Kurdistan.
Amendments to this article involve calculating the price of a barrel of Kurdish oil at sixteen dollars, subject to fluctuating market conditions, which remains a contentious issue between the two entities.
The Finance Committee is optimistic about securing a vote on the amendment, contingent on reaching an agreement with the Finance Minister amid significant political divisions regarding the compensation mechanism outlined in this amendment.
Recently, the Parliamentary Finance Committee held discussions with Minister of Finance Taif Sami to address the fiscal outlines for the 2025 budget and ensure employee salaries are secured.
Masroor Barzani, President of the Kurdistan Regional Government, expressed dissatisfaction with Baghdad’s dealings with the region, asserting, “We believe that Baghdad’s current approach is unjust and unacceptable. We must collectively advocate for the rights of Kurdistan, as our citizens deserve better treatment.”
The fiscal budget for the current year remains unimplemented, drawing concerns from experts regarding the government’s financial management capabilities and the potential for broader economic and political instability.
Disputes regarding the region’s budget share are recurrent, stemming from inconsistent adherence to budgetary provisions and oil export regulations, particularly after the cessation of exports through the Turkish route. Consequently, Baghdad has resorted to issuing salaries on an advance basis and subsequently began the localisation of salaries following the Federal Court’s directive.
