Council of Representatives approves draft Fiscal Deficit Financing Law

Kurdish caucuses boycott session
Lawmakers vote on the draft Fiscal Deficit Financing Law during a session early on November 12, 2020. (Photo Credit: Iraqi News Agency)

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SULAIMANI —The Council of Representatives early on Thursday (November 12) approved the draft Fiscal Deficit Financing Law to fill deficits through borrowing  12 trillion Iraqi dinars (some $10 billion) in internal and external loans to finance the salary payments to public sector employees and other expenditures for the last three months in 2020.

Kurdistan Regional Government (KRG) should commit to hand over an amount of barrels of oil per day (bpd) to the federal government that will be organized by the State Organization for Marketing of Oil (SOMO) to receive 320 billion Iraqi dinars to pay its civil servants , according to the law.

The law requires the federal Finance Ministry to allot twenty percent of the fund for investment projects, read the law.

The Sunni and Shia caucuses passed the law without consent from the Kurdish caucuses.

The Kurdish caucuses walked out of the floor debate in protest of the Kurdistan Region's share from the loans.

Lawmaker Hoshyar Abdulla said in a joint statement with lawmaker Ahmad Haji Rasid that the KRG can come to an agreement with the SOMO about how many barrels of oil it should send, so that the he KRG's share would be secured. 

“The Region’s share has not been cut off, but it has been linked with sending oil and incomes [by the KRG],” they said, saying that the Shia blocs were infuriated about the KRG previous failures abide by its commitments to the deals with the federal government. “What we could do, we did to defend the 320 billion Iraqi dinar fund."

“If the Kurdistan [Region] sends a delegation to Baghdad and come to an agreement with the [federal] Prime Minister [Mustafa al-Kadhimi] and the [federal] finance minister, and if [KRG] is committed to the loan law, it will be able to achieve more than the 320 billion Iraqi dinars.”

Iraq faces a serious financial shortfall due decline in oil prices marred by the coronavirus pandemic and endemic mismanagement and corruption the country has faced since the fall of the former Ba’ath regime, as the country almost exclusively counts on oil exports to finance its salary payroll and other expenditures.

The federal government has been falling behind in paying civil servants on time since September.  

Late on Wednesday, lawmaker Jamal Kochar had told NRT Digital Media that some caucuses inserted a proposal into the draft loan law to coerce the KRG to submit 480,000 bpd and its overall non-oil incomes so that the federal government will send 12.67 percent share of the loans.

(NRT Digital Media)

*This story updated at 01:18 p.m. EBL time