Kurdistan decreases expenses, increases revenues in 2016

A year after the KRG declared its reforms policy, people are now asking whether any of the promised reforms have been made.  
Head of the region’s Center for Information and Strategic Research, Dr. Aras Khoshnaw, explained that work has been done on some of these reforms.

 
“Good work has been done on reducing government expenditures, bringing them down by 70-percent,” Khoshnaw said. “Internal revenues have increased by 25-percent, excluding the income coming from the customs. Furthermore, every ministry has worked separately on enhancing its income.”
 
The Kurdistan Region has been undergoing difficult economic conditions over the past two years due to its budget freeze from Baghdad since 2014, falling oil prices and increased military expenses because of the war with ISIS which began in June 2014.
 
As a result, the Kurdish Prime Minister Nechirvan Barzani introduced austerity measures in early 2016 in an attempt to reduce expenses, enhance revenue, and reduce the impact of the region’s ongoing financial crisis.
 
 
The KRG presented its reforms policy in a workshop held at Saad Abdullah Hall on Jan. 23, 2016, to a large audience from the government and private sectors.
 
 “We sell one barrel of oil for $20,” Barzani said at the time. Nowadays, one barrel of Kurdish oil is sold for more than $40.
 
A year ago, the prime minister also declared that the government had 1,400,000 employees in general with 700,000 of those being active employees. He also said that the government needed 850 billion Iraqi dinars (IQD) to pay these employees. The government’s monthly income was 450 to 500 billion IQD (about $377 to $419 million) at the time. The region’s oil sales, given its current price, now make up twice this amount.
 
The deputy head of Kurdistan’s parliamentary commission on energy and natural resources, Dilshad Shaaban, told Rudaw that statistics show if the Kurdistan Region had sold 18 million oil barrels monthly, its monthly revenue would be $804,600,000. However, he said this amount is not completely the KRG’s.
 
“Out of this amount, $195 million will be dedicated to previous debts, $94 million to oil companies, and $25 million for bank depositing and exchanging the cash. The total amount remaining is $490 million,” Dilshad said. “The government can pay full salaries to only 66-percent of its employees.”
 
This is aside from the government’s decision to take back its money from big companies to which it had lent.
 
“Some of these loans have been paid back,” Khoshnaw added. “However, most government mortgages have still not been paid off as the government decided that people should not be forced to pay back their mortgages on time due to its reduced wages policy.”
 
In a bid to cut down on costs, the government also decided to reduce its structure and size.
 
“Most ministries have done well on this. But more work can be done,” Khoshnaw explained. “The transparency commission for revenues has not done its work adequately. The commission for exchanging oil revenues from dollar to Iraqi dinars has not done anything substantial either. The ministry of natural resources, however, issues its monthly reports.”
 
The government’s most difficult decision to make last year was to pay reduced wages to its employees, bringing down its salary expenditures from 870 billion IQD to 621 IQD.
 
“Because it was said in the past that reduced salaries policy will be changed whenever the government revenues increase, it is now time to change it,” Khoshnaw said. “Oil revenues have now increased a lot compared to the time when the decision was made. The predictions are that the policy will be somehow changed in April this year.