Economic Landscape of the Kurdistan Region Amid Ramadan and Financial Strain
The people of the Kurdistan region are experiencing an unusual cold season this year, impacting customary preparations for the holy month of Ramadan. Markets, previously bustling with activity, are now overshadowed by a pervasive financial crisis that has hindered both social and religious celebrations.
Salam Abdullah, a member of the Sulaymaniyah Chamber of Commerce, highlights the significant issues within local markets, attributing their paralysis to a long-standing salary crisis that has plagued the region. He notes, "The consumption of food remains stable in the cities of Kurdistan as these are basic necessities that cannot be foregone, unlike luxury items."
Trade relations with Iran play a pivotal role in the region’s economic health, with food products making up a substantial portion of this exchange. Abdullah emphasizes that this reliance underscores the severity of the financial crisis affecting Kurdistan.
The roots of the salary crisis can be traced back to 2014 when disputes between Baghdad and Erbil over oil management and budget allocations intensified. The situation worsened due to the repercussions of the war against ISIS and plummeting oil prices, which ultimately halted financial transfers from the federal government to the region.
Recent discussions between federal and regional government delegations have led to some optimism. On February 3, 2025, Awat Jannab, the Minister of Finance for the Kurdistan Regional Government, announced that an agreement was reached to address the salary issues for employees in 2025.
Skepticism Surrounding Agreements
Despite this announcement, many employees harbor doubts about the longevity of this agreement, reminiscent of past accords that failed to yield lasting solutions. Ongoing accusations between the two governments about the failure to implement agreements create an atmosphere of uncertainty. The most recent example was highlighted in an agreement announced by regional Prime Minister Masrour Barzani in April concerning employee salaries.
Market Recession During Ramadan
Khaled Haider, a professor of economics at the University of Sulaymaniyah, believes that traditional occasions like Ramadan usually stimulate market activity. However, he notes that this year has been markedly different. The lack of disposable income among citizens has severely restricted their ability to make purchases, unlike the trends seen in other cities and countries.
Haider states, “This Ramadan has been characterized by a recession in the markets, with only basic foodstuffs witnessing consistent demand; non-essential luxury items, however, face dismal sales due to the erratic nature of salary distributions.”
Cultural Significance of Ramadan
The atmosphere of Ramadan nights in the Kurdistan cities stands in stark contrast to other regions in Iraq, largely due to the security and stability present. Cities like Erbil come alive, with cafes and restaurants remaining vibrant late into the night, providing spaces for social gathering and cultural activities such as traditional games.
Each city in the region boasts unique culinary traditions. Notable dishes include the Sulaymaniyah specialty of raisin soup and cooked bird specialties in Erbil, with Zakho being recognized for its unique type of bread mixed with tahini.
Challenges Posed by the Economic Crisis
Merchants have remarked on the pronounced impact of the financial crisis as they prepare for Ramadan. Barham, a shop owner in Sulaymaniyah, shared that the salary crisis has dampened the expected hustle and bustle typical for this period. "Traditionally, we witness large crowds in the markets as citizens purchase food, sweets, clothing, and more," he explained. However, the current climate lacks confidence, largely due to irregular salary payments. The colder winter season further compounds issues, diminishing tourist activity which usually supports market demand.
Governmental Interventions and Recommendations
Suran Omar, a member of the Finance Committee, noted previous requests from the Federal Ministry of Finance to the regional government to provide verifiable internal revenue figures. Omar indicated that the ministry rejected a reported revenue amount of 51 billion dinars sent from the region for January, demanding complete and accurate financial disclosures instead. He mentioned that the ministry’s demands included employee data for direct salary disbursement, which the regional government has yet to comply with, adding another layer of complexity to the ongoing salary crisis.
As the dynamics between the federal and regional governments evolve, understanding the underpinnings of this economic landscape remains crucial for stakeholders planning for the future of the Kurdistan region.
