HEADLINES:

Baghdad digs in, says no further transfers to Erbil until budget deal complete

2020-05-31

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SULAIMANI — The federal Ministry of Finance said on Sunday (May 31) that it will not release any additional money to the Kurdistan Region until Baghdad and Erbil fully resolve their budget dispute.

The ministry said in a statement that it is committed to following the law and official procedures for spending money, stressing that a recent disbursement of 400 billion Iraqi dinars ($335.3 million) to the Kurdistan Regional Government (KRG) was specifically to pay the April salaries of public sector employees.

It reiterated that it had transferred the funds under the terms of an interim agreement outlined in letters exchanged between the two capitals, which promised that they would hold intensive meetings in June to finalize a comprehensive agreement within thirty days.

Under the terms of the 2019 Federal Budget Law, Baghdad is expected to send 12.67 percent of the entire budget to the Kurdistan Region, in return for 250,000 barrels of crude oil per day for export.

However, the KRG abrogated the agreement immediately, never sending any oil to Baghdad.

Nevertheless, the federal government continued to send funding to pay for public sector salaries, as it was required to under the budget law.

In April, after tolerating the KRG’s failure to follow the law for fifteen months, it froze all budget transfers.

Negotiating teams began meeting at that point, but so far have been unable to reach an agreement.

Historically low oil prices have exacerbated the dispute by putting both governments under increased financial pressure, given their reliance on oil exports.

(NRT Digital Media)