Statement from the KRG Ministry of Finance and Economy
Despite clear constitutional entitlements, provisions of the Budget Law, and rulings from the Supreme Court, mandating the disbursement of salaries to the Kurdistan Regional Government (KRG)’s public sector employees in line with practices across Iraq, the Federal Government of Iraq continues to breach these obligations.
Funds allocated for this purpose are explicitly outlined in the Budget Law and have been agreed upon by both the KRG and the Federal Government to ensure the payment of salaries to the Kurdistan Region’s public sector employees though the end of 2024. Nevertheless, the Federal Ministry of Finance has failed to transfer the agreed funds, violating the constitutional rights of the people of the Kurdistan Region, and withholding their rightful financial entitlements.
1. The total allocation for the Kurdistan Region in 2024, encompassing public sector salaries, pensions, and social welfare provisions, was IQD 11,576,521,335,000. While the region's requirements for those purposes are approximately IQD 12,000,000,000,000, the deficit was managed by reallocating funds to the salary pot. However, the Federal Ministry of Finance has disbursed only IQD 10,752,582,558,480 for 2024, leaving IQD 823,938,776,720 of allocated funds for the KRG’s public sector employees unpaid. This shortfall effectively withholds one month’s salary from the region’s public sector employees. By citing alleged disbursements and a lack of cash flow as pretexts, the Federal Government has effectively made the public sector employees of the Kurdistan Region victims of its internal issues.
2. Regarding the internal revenues of the Kurdistan Region for the financial year 2024, certain individuals and parties have been using this issue as an opportunity for political grandstanding. In May, an agreement was reached between the Prime Ministers of Iraq and the KRG concerning the KRG’s obligation towards the federal budget. For five consecutive months, the KRG contributed IQD 399,168,961,000 to the federal budget. However, this arrangement became unsustainable when the Region faced a significant financial deficit caused by the Federal Government’s actions. Consequently, the KRG was compelled to address the deficit by utilising internal revenues.
From January to October 2024, the KRG has been compelled to allocate approximately IQD 960,000,000,000 from its internal revenues to address the recurring monthly salary fund deficit caused by the Federal Ministry of Finance’s repeated actions, often justified by unfounded excuses. A substantial portion of the remaining internal revenues, estimated at IQD 160,000,000,000 per month, has been allocated to cover operating expenses essential for public services. These include healthcare, education, higher education, electricity, sanitation, water, and other critical services, with total expenses estimated at IQD 2 trillion. Moreover, the KRG has financed various developmental projects across different sectors throughout the Region. All these projects have been exclusively funded through internal revenues, as the Federal Government has failed to contribute even a single dinar towards any projects for several years.
Since July 2024, the KRG has implemented the decision to equalise pensions for the Region’s pensioners in accordance with the Unified Iraqi Pension Law. This decision, mandated by the Supreme Court, requires the Federal Government to provide the necessary funds for this equalization. However, this has placed an additional burden on the Region, amounting to approximately IQD 60 billion.
Despite the Supreme Court's ruling in favour of the Region, the Federal Ministry of Finance has not allocated a single dinar towards this obligation. Consequently, the KRG has been forced to finance the equalization entirely from its internal revenues.
This has been funded from internal revenues. Additionally, the funds for the salaries of temporary contracted teachers by the Ministry of Education and Higher Education have not been yet provided. Such fulfilment has become increasingly substantial, particularly following the change in the contract of these employees from temporary contracts to permanent contracts. The salaries of these teachers, estimated at IQD 20 billion per month, are funded by internal revenues.
3. For the salaries of October 2024, the KRG’s Ministry of Finance requested a fund of IQD 999,124,329,000. However, the Federal Ministry of Finance disbursed only IQD 760,262,000,000, resulting in a deficit of approximately IQD 239,000,000,000, which the KRG was compelled to cover using internal revenues. For November salaries, the KRG required IQD 1 trillion as indicated in the trial balance tables. Yet, the Federal Ministry of Finance disbursed only IQD 631,335,000,000. Similarly, for December salaries, the KRG required IQD 1 trillion, but the Federal Ministry of Finance allocated just IQD 441,493,000,000. In total, for the last three months of 2024, the Federal Ministry of Finance disbursed IQD 1,833,090,000,000 for salaries. This represents a shortfall of IQD 1,167,000,000,000 from the required disbursement to fully fund salaries for the three months.
With the confirmation of the allocated funds set to arrive this week, the distribution of November salaries will commence next week. As the Ministry of Finance, we remain committed to securing the December salaries, which are the rightful obligation of the Iraqi government to provide.
Over the past few months, the Ministry of Finance has successfully addressed all observations and resolved technical issues related to the salary lists. Our technical teams have maintained constant communication with their counterparts in Baghdad, ensuring full compliance and leaving no justification for the federal government to reject or delay the disbursement of salaries for public sector employees in the Kurdistan Region.
During the most recent meeting between the two ministries, held in Baghdad on December 15, 2024, Iraq’s Finance Minister pledged to provide the funds necessary for December salaries as well as the remaining amount required to fully cover November salaries.
Although the Kurdistan Region is allocated shares in the budget under the Budget Reallocation Law, and is permitted to reallocate funds to cover the salary deficit, the transfer of IQD 430,000,000,000 to address the shortfall for the last three months of 2024 has led to further implications.
That said, Article 60 of the Budget Law empowers the Iraqi Prime Minister to address salary deficits even when allocated shares have been exhausted by the Region, given that the issue of salaries is critical, impactful and directly affects people's livelihoods.
According to the latest report co-authored by the technical teams of both ministries, who spent a week in the Kurdistan Region reorganizing the trial balances for the period between January and November, all the financial reports were found to be accurate and consistent with those previously submitted by the KRG.
2 January 2025