Region’s budget share is lower than expected
KRG seeks economic independence
The financial policy of Baghdad towards Kurdistan is increasingly unpredictable. Every year Kurdistan Region’s share in the country’s budget is decreasing despite the steady increase in the country’s revenues and budget. More than 96% of Kurdistan Regional Government’s (KRG) revenues come from the budget share given by Baghdad’s central government. According to an agreement between Erbil and Baghdad in 2006, central government has to share 17% of its annual budget with Kurdistan.
As per Finance and Economy Ministry of Kurdistan Regional Government’s report on the draft budget of Kurdistan region for 2013, one of the most important strategies of KRG in remedying this problem is to head towards establishing the foundations for an independent economy.
Calculating Region’s budget in Baghdad
Kurdistan’s budget deficit has lowered by 17%, but the reason there is a deficit is because the Iraqi government is not committed to giving all the rights of this region in cal- culating the budget. It has always tried to reduce the budget, and this is causing problems within Kurdistan Region. Consequently members of the Kurdistan parliament are currently working on the region’s 2013 budget to push for economic independence.
Baghdad’s Finance Ministry’s budget report states that nearly 30% of the 2013 budget of Iraq is allocated to sovereign expenditures, of which KRG is excluded and does not receive any shares. Omar Nuraddini, member of Kurdistan Parliament on the Kurdistani Bloc argues that the Iraqi government has increased sovereign budget in order to reduce KRG’s share in the budget.
MP Nuraddini explained that the Kurds have used all means of dialogue, and diplomatic methods to put an end to this situation, but unfortunately they have not been successful. As a result of this, the only solution that remains is to return to domestic resources, and start aiming for economic independence.
KRG authorities have continuously organized talks with Baghdad at different levels, in an attempt to claim their rights, particularly with the budget of Peshmarga. However, Baghdad has unilaterally determined Kurdistan Region’s share in the budget without involving Kurds in settling the country’s budget policy. Sozan Khala Shahab, member of the Kurdistan Parliament on the majority Kurdistani Bloc, strongly supports the idea of economic independence, and suggested that the region should have a plan for securing its rights in Iraq’s budget.
The main source of Iraq’s revenues is the oil pumped from both Iraqi and Kurdish oil fields on a daily basis, which is exported to world markets. Kurdistan Region has recently started to export its oil to Turkey without the consent of the central government. It has attracted several oil companies to its region because of the stability it offers. Safin Dizayee, the official spokesperson of the KRG announced that the Ministry of Natural Resources of KRG will continue to export its crude oil to Turkey. Dizayee explained that KRG is doing this out of necessity because Baghdad central government has not considered the region’s 17% share in the budget, and consequently they are merely exercising the region's rights to their basic needs.
Reduction in the regions budget share
compared to Iraq
Iraq’s federal budget has increased from its 2012 value of IQD 117,123 billion to IQD 138,424 billion in 2013, which shows an 18.1% increase. However, Kurdistan’s share in the budget has increased by only 14.2% from its 2012 value of IQD 12,604 billion to IQD 16,406 billion. According to the Iraqi constitution, KRG’s budget share should increase in proportion to that of Iraq, but this has not been the case in 2013’s budget. The reason being, the share of the country’s sovereign budget has increased considerably, and this has pushed the region’s share from 10.7% in 2012 to 10.4% this year.
Members of Kurdish parliament exit the building in this file photo.