KRG: Kurdistan’s economic conditions will improve in 2017
PM:07:42:25/01/2017
The economic conditions will improve in the Kurdistan Region if oil prices rise, the reform system we have embarked upon succeeds, and the war on ISIS ends,” Rabar Sidiq, the Kurdistan Regional Government’s (KRG) deputy finance minister, told Rudaw. The new Iraqi budget favors Baghdad, authorizing it to export more oil from the Kurdistan Region without any increase in the region’s budget share in return and subject the KRG to legal proceedings and economic problems.
 

Rudaw: Do you think Kurdistan Region’s economic conditions will improve in 2017?

 

Rabar Sidiq: Kurdistan’s economic conditions are predicted to be better in 2017 than they were in 2016. This prediction is based on three possibilities. First, it is based on a potential rise in oil prices. If oil prices continue to soar, they will have a positive impact on Kurdistan’s revenue and economic conditions. Second, it is based on an overhaul in the structure of the region’s economic and finance ministry. Third, it is based on a reduction in the costs of the war with the Islamic State (ISIS). This war has been costly for the Kurdistan Region whose expenses will decrease when the war finishes. The money spent on this war can be spent on public services, leading to a cash flow into the market. In April, we will see a beginning in improved financial conditions if these three predictions stand.
 

Will the government’s improved economic conditions have any impact on the salaries of its employees?

 

  Peoples’ living conditions are bad, especially the employees.  

 

Yes, an increase in the region’s revenues will surely have an impact on their salaries. The government’s priority is to improve the  living conditions of its employees. The prime minister has asserted in many meetings that the government’s first duty will be to improve peoples’ living conditions once the financial situations improve. This improvement will be two-fold. The first thing is for the government to be sure that it can pay monthly salaries of its employees on time. The second step is for the government to revise the current policy of giving its employees reduced wages, and increase these wages. Peoples’ living conditions are bad, especially the employees. However, we have to increase these salaries on the basis of an informed study and have to be sure that we have the necessary cash to meet this.
 

Who will benefit from these potential changes other than employees?  People to who the government is in debt, namely companies, contractors and banks. Is it not better to come to an agreement with the federal government instead of depending on these three possible eventualities?


  The past experiences show that the Iraqi government will not commit to treaties and is not ready to send us our budget share.  

 

The past experiences show that the Iraqi government will not commit to treaties and is not ready to send us our budget share. It was the Iraqi government which unilaterally cut Kurdistan’s budget in early 2014. The Iraqi government has still not given us 70 trillion Iraqi dinars (IQD), an amount they were supposed to send us as part of our budget share for 2005 up to now. The Peshmerga budget share alone, which Baghdad owes us is more than 12 trillion IQD and hasn’t been sent since 2007. The Kurdish government should decide on a new payment system instead of dreaming about an agreement with the Iraqi government on this. This system should suit the economic and social conditions in the Kurdistan Region.
 

  The bill gives the Iraqi government the authority to export more oil from the Kurdistan Region with no increase in Kurdistan’s budget share in return.   
Why didn’t you accept the Kurdish MP’s proposal for the Iraqi 2017 budget bill?

 

 

 

The Kurdistan Regional Government’s (KRG) position is that the bill in general is not in the interests of the people and government of Kurdistan, and this is mainly because of these reasons. First, in drafting the articles of the bill, federal principles and a distribution of powers are not taken into account. There is a lot of financial and executive centralization in the bill. Second, according to the bill the Kurdish government should send no less than 250,000 barrels of oil daily from its oilfields and no less than 300,000 from Kirkuk oilfields to the Ceyhan port. The bill gives the Iraqi government the authority to export more oil from the Kurdistan Region with no increase in Kurdistan’s budget share in return. 

 

This is while the Iraqi government can subject Kurdistan to legal and economic plights if the overall amount of oil it is supposed to send lacks one barrel of oil. In addition, the bill has dedicated no cash for the oil companies operating in the Kurdistan Region. Third, according to the bill, oil sales should only be made through the Iraqi oil company known as Somo. This means that all the endeavors the KRG had made for marketing its oil will go futile. Fourth, the bill is unclear as to how much money the Iraqi government will be giving to the Kurdistan Region. The eighth article in the bill states that 17-percent from the Iraqi government’s active expenses will be given to the Kurdistan Region. The expression ‘active expenses’ makes Kurdistan’s budget share unclear as the bill does not specify how active expenses are determined. This expression is new. It was not there in the past.

 

Do you think the Kurdish MPs who voted for the Iraqi 2017 budget were tricked?

 

Yes, unfortunately. I think they might have focused on only some articles from the bill. But when you analyze it, you then realize that the bill is not in the interests of the Kurdistan Region.
 

Why has the KRG not asked the Iraqi government for its 70 trillion IQD budget debt?  

 

The KRG has been asking for this amount ever since 2007, in meetings, through high delegations and official letters. On several occasions, His Excellency Nechirvan Barzani has led high delegations to Baghdad asking them to commit to pay these debts. But they haven’t paid it yet, citing different excuses. The Iraqi government’s lack of commitment to Kurdistan’s budget share shows that it is not easy for the economic relations between the two to return to pre-2014. That is why there should be a new treaty which is in the interests of both.
 

How can Kurdistan’s economic and financial system be overhauled?

 

It has now been two years that the ministry of finance has been working in collaboration with a team of foreign advisors. The team has been delegated by the presidency of the government to study the economic system and propose needed changes. Their proposals include: the ministerial structure, the economic and statistics apparatus, tax, and customs affairs. This is intended to control the income and expenditure. It is going to be a continuing and lengthy process.
 
The economic entitlements the Iraqi government has not paid to the KRG from 2005 to 2016
-        Sovereignty expenses: 3 trillion, 590 billion, 222 million IQD
-        Governance expenses: 9 trillion, 203 billion, 871 million IQD
-        Provincial development expenses: 3 trillion, 650 billion, 847 million IQD
-        Peshmerga economic entitlements: 12 trillion, 721 billion, 754 million IQD
-        2014 budget: 16 trillion IQD
-        2015 budget: 12 trillion, 341 billion IQD
-        2016 budget: 12 trillion, 570 billion IQD
-        Total: 70 trillion, 77 billion, 694 million IQD 

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