'These are challenging times for the Kurdistan Regional Government,' says PM Barzani in speech

Calls for reducing ratio of public spending on salaries
Kurdistan Regional Government (KRG) Masrour Barzani speaks on May 22, 2020 (NRT Digital Media)

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SULAIMANI — In an address ahead of Eid al-Fitr, Kurdistan Regional Government (KRG) Masrour Barzani acknowledged that the government’s budget is in dire straits and called for economic diversification.

“The whole world, including the Kurdistan Region, is going through a difficult economic period due to the implications of the [coronavirus] outbreak and falling oil prices,” he said in a speech on Friday night (May 22).

“These are challenging times for the Kurdistan Regional Government,” he added.

Taking stock of the KRG’s accounts, he said that the only $30 million was deposited in the treasury from independent oil sales in April and internal revenues were just $60 million.

Before Baghdad cut budget transfers in April, Barzani said that Erbil received $383 million per month, which he said was inadequate to cover the KRG’s payroll.

Additionally, the government owes $27 billion in debt, a situation that he blamed on the failure of “previous Iraqi governments… to deliver the budget of the Kurdistan Region.”

“As a result, unfortunately the government has no reserves, forcing us to depend on revenues received monthly.”

While Barzani spoke in general about economic diversification away oil, it was clear that he wants to reduce the ratio of the KRG’s budget spent on public sector salaries and that doing so would be a major component of any attempt at reform.

“This nation cannot prosper by only paying salaries. We need a stronger foundation,” he said, explaining that 80 percent of revenues goes to salaries, fifteen percent to running the government, and five percent to investment.

“That is why we together – as citizens, government and political parties – need to make a consequential decision that even in better financial circumstances most of the revenues cannot be spent on public sector salaries. We must use a significant part of the budget for increasing public services and building a stronger economy,” he said, characterizing the decision as one between moving “forward or backward.”

The KRG prime minister did not outline how exactly his government planned to address these challenges from a technical point of view, but instead called on all the Region’s parties to unite behind its efforts.

“Of course, these reform measures must be comprehensive and apply to us all. No individual or faction must be allowed – for personal or political interests – to block reform,” he said.

“I am certain that with your help we will get through this difficult chapter, and that Kurdistan will move forward together toward prosperity. In that moment, I am certain that many will emerge to claim the success and achievements,” Barazni concluded.

(NRT Digital Media)