According to official reports, Kurdistan Region has had a $1,2 billion of revenues in 2016 which it has received from other sources than the export of oil. Photo: Rudaw
ERBIL, Kurdistan Region— The Kurdistan Regional Government’s (KRG) annual deficit narrowed in 2016, hovering near its lowest level in 4 years, but the improving fiscal outlook has done little to end the ongoing economic hardship in the country with thousands of government employees still waiting for their pay checks, according to official data which Rudaw has studied.
The government reports show that the budget deficit has shrunk around 99 percent since December 2015 when the first patch of painful austerity measures were launched amid strong public protests.
The deficit for the 12 months, ended in December, shrank to $63 million, according to the data. This is down from the staggering $4 billion a year earlier.
According to the government reports, the KRG has had an annual budget nearing $5,4 billion in 2016, about 80 percent of which is from oil revenues, while its spending has hovered over $5,5 billion, down from around $10 billion in 2013.
Stripped of its handsome $1 billion monthly budget by the central government in Baghdad since February 2014, the KRG has struggled to finance its near lavish spending on government employees whose number is estimated at above 1,3 million people.
Cancelling large national projects, reducing its annual expenditures and public subsidies, and most painfully, the heavily reduction of wages for vast majority of people on government payroll has temporarily shrunk the once double digit growth to almost -6 percent, following the plummeting oil prices coupled with a resource consuming ISIS war.
“The KRG has been successful in its austerity measures,” said a Kurdish economist Dr. Atouf Barzani who predicts that the austerity actions will improve the state of Kurdish finances in 2017.
“It will be a better year this year since government spending has shrunk tremendously while the outlook for oil prices seems to be promising, predicted to rise on global markets,” Barzani said.
According to Barzani, the government was faced with two options when the financial crisis began in mid-2014. “Either reducing the number of employees or reducing the wages for all employees. The KRG picked the second choice,” he added.
The data show that the KRG has also managed to pay back some $892 million in 2016 to national and international loan givers and deposited around $695 million to companies currently drilling for oil in the Kurdistan Region for their past work, although it still owes nearly $1 billion to international oil firms.
According to the official reports, the government has had a $1,2 billion of revenues in 2016 which it has received from other sources than the export of oil.
The KRG is currently exporting around 650,000 barrels of oil per day to the Turkish Ceyhan port where it is sold to international buyers.