KRG, federal government reach ‘mutual understanding’ on 2021 federal budget

KRG Prime Minister Masrour Barzani and Deputy Prime Minister Qubad Talabani meets a delegation visited Baghdad last week, in Erbil December 5, 2020. (Anadolu Agency)

SULAIMANI (ESTA) — Kurdistan Regional Government (KRG) and the federal government have come to a “mutual understanding” regarding the federal budget for fiscal year 2021, according to a government statement.

The KRG said talks between Erbil and Baghdad were ongoing in an effort to reach a fair and lasting agreement on outstanding issues.

“Negotiations between Erbil and Baghdad have now progressed positively to a mutual understanding on the draft 2021 budget bill,” the KRG said in a statement.

A KRG delegation led by Finance and Economy Minister Awat Sheikh Janab visited Baghdad on Thursday night to discuss the Region’s share of the federal budget for 2021.

A source from the KRG Council of Ministers, who spoke under condition of anonymity, told Esta Media Network that Erbil and Baghdad had reached an initial agreement over the federal budget.

The Region’s share would be 12.6% per the initial deal, the source said.

“Baghdad’s precondition to transfer the Region’s share is that the KRG hands over 250,000 barrels of oil per day and 50% of revenue from the border crossings to Baghdad, in exchange for 900 billion dinars ($756 million),” the source added.

In April, the federal government, led by former prime minister Adil Abdul Mahdi, cut off all budget transfers to the Kurdistan Region due to the KRG’s failure to export 250,000 barrels of oil per day (bpd) through Baghdad.

In November 2019, Erbil and Baghdad reached a deal to resolve their ongoing disagreement over oil, after Erbil agreed to export 250,000 bpd through Baghdad to Turkey’s Ceyhan port in exchange for the Kurdistan Region’s share of the federal budget.

Relations between Baghdad and Erbil eased after Prime Minister Mustafa al-Kadhimi took office in May.  In August, Kadhimi told the KRG prime minister in a telephone call that the federal government would send 320 billion Iraqi dinars to the Kurdistan Region as payment for the Region’s employees until the end of the year.

The federal government has not been able to transfer 320 billion dinars to the Kurdistan Region since the Iraqi Council of Representatives adopted a loan law in November, without Kurds’ consent.

The law commits the Kurdistan Region to hand over non-oil revenues and an amount of oil that SOMO indicates to the federal government in exchange for an amount of money as payment for the Region’s public servants.

Iraq’s state al-Sabah newspaper reported on Sunday that the federal government would transfer salaries of public servants to the Kurdistan Region in exchange for 250,000 bpd and 50 percent of revenue of border crossings from the Kurdistan Region.

“The agreement is the same deal reached with Abdul Mahdi’s government, but some provisions were added to it,” the newspaper said. “The agreement will be fixed in the draft 2021 federal budget law and will be sent to the Iraqi parliament.”

Iraqi Council of Ministers delayed its meeting on Saturday to Tuesday to vote on the draft budget law.

On Saturday, Lawmaker Ahmed Haji Rashid said Baghdad and Erbil had not reached any agreement on the federal budget bill.

“They only discussed two suggestions. First was the handover of 250,000 barrels of oil and half of revenues of the border crossings, with the Region paying the companies’ costs,” the lawmaker said.

“Second was the handover of 450,000 barrels and half of revenues of the border crossings, with the federal government paying the companies’ costs.”

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