Three Years of Shortfalls: The Kurdistan Region Received Only 41% of Its Federal Entitlements
Following the approval of Iraq’s Federal Budget Law on 21 June 2023—covering the fiscal years 2023, 2024, and 2025—the Kurdistan Region’s financial entitlements were determined after prolonged negotiations between the Kurdistan Regional Government (KRG) and the Federal Government of Iraq.
Over this three-year period, a significant gap has emerged between the Kurdistan Region’s legally and constitutionally defined entitlements and the amounts actually disbursed by the Federal Government. This shortfall has contributed to a marked slowdown in investment activity and placed sustained pressure on the Region’s public finances.
Available data indicate that the Kurdistan Region’s total financial entitlements amounted to approximately IQD 58.3 trillion, while actual transfers reached only IQD 24.3 trillion—equivalent to just 41% of the amounts due and approximately 3.9% of Iraq’s total federal budget over the same period.
Despite federal allocations totaling approximately IQD 165 trillion for national investment expenditures, the Kurdistan Region did not receive any investment funding. This absence of investment transfers led to the suspension of numerous infrastructure and development projects across the Region.
In the oil sector, the suspension of exports in March 2023 resulted in estimated losses exceeding USD 25 billion to the Iraqi economy and the Kurdistan Region combined. Although exports resumed in late 2025, and the KRG exported more than 19.5 million barrels of oil through the State Organisation for Marketing of Oil (SOMO), obstructions relating to the regular payment of public-sector salaries in the Kurdistan Region persisted throughout 2025.
Between 2023 and 2025, the Federal Government did not fully disburse salary allocations for public-sector employees in the Kurdistan Region, resulting in multiple months of unpaid entitlements. During this period, the KRG continued to meet its federal obligations, including the transfer of IQD 919 billion in non-oil revenues to the federal treasury in 2025.
Department of Media and Information