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Kurdish Finance Minister: Baghdad Shortchanges Us
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RUDAW SPECIAL on 24/12/2011 00:37:00
 
ERBIL, Iraqi Kurdistan -- In an interview with Rudaw, Bayz Talabani, Kurdistan
Region’s Minister of Finance, discusses disputes between Baghdad and Erbil
over the budget for the region and Kurdish Peshmarga forces, unaccounted-for
funds and his future in government.
Rudaw: It’s time for your ministry to send the annual budget outline to the
Kurdistan Parliament. What have you done in this regard?
Bayz Talabani: Every year in October, preparation for the budget begins.
However, it is impossible to do this without knowing the final budget for the
Kurdistan Region from the central government in Baghdad. Before October, we
asked all the government ministries to send their budget for the year so that we
can discuss it at the Ministry of Finance and the Ministry of Planning. There is
also a supplementary budget but we only discuss the budget that we receive from
the central government.
We prepared the draft budget for all the government ministries, the Council of
Ministers, Parliament, the (Kurdistan Region) President’s office and other
departments. We are now at the final stage of preparing and sending the budget
to the government. Once the government has approved it, it will be sent to
Parliament.
We now have faced another problem which has caused budget delays. In the past
Kurdistan Region’s budget was 14 trillion Iraqi Dinars from the total budget
of Iraq, but now it has been reduced to 12 trillion. This amount has not yet
been submitted to the Iraqi Parliament for approval. That’s why we decided not
to send the budget to the Kurdistan Council of Ministers for approval yet. The
problem is not only a few million. It is more than that.
“The Iraq’s Ministry of Defense is supposed to provide the salary of the
Peshmarga forces, but they don’t provide it and that leads to a shortage in
Kurdistan total budget every year.”
Rudaw: According to some of your earlier statements, in 2012 the Kurdistan
Region will receive only 11 percent of its budget instead of the usual 17
percent Baghdad. Is this true?
Bayz Talabani: I would like to explain how the process of Kurdistan Region’s
budget from Baghdad works. First, the central government secures the
presidential and cabinet budget as well as the defense ministry’s budgets from
the total revenue of the country, and only then the Kurdistan Region receives 17
percent of the remainder. For example, let’s say Iraq’s total budget is 120
trillion Iraqi Dinar and 46 trillion goes to defense and presidential offices.
Kurdistan Region receives its 17 percent from the remaining budget (74 trillion)
which means the Kurdistan Region’s budget would be 12 percent. The Iraqi
government has not yet resolved the budget for (Kurdish) Peshmarga forces.
The Iraq’s Ministry of Defense is supposed to provide the salary of the
Peshmarga forces, but they don’t provide it and that leads to a shortage in
Kurdistan total budget every year. We deserve to receive a lot more from
Iraq’s total budget but they aren’t complying. We haven’t received
Peshmarga salary from the central government for seven years.
Rudaw: Do you think Kurdish officials and ministers in Baghdad have done a good
job, especially in discussing the budget to ensure Kurdistan receives its fair
share?
Bayz Talabani: They all tried in both government and Parliament. You can only
try and demand. The rest depends on whether they respond to the demands or not.
Rudaw: How much will the budget shortage be in 2012?
Bayz Talabani: The main reason for the budget shortage is because of the
Ministry of Peshmarga. As I said, Iraq’s Ministry of Defense doesn’t provide
funds for the Peshmarga from its budget. So we have to provide it from our own
budget. We don’t know for sure yet how much the shortage will be.
Rudaw: How many offices in the Kurdistan Region receive money from the
presidential budget?
Bayz Talabani : The residency and passport offices have been receiving money
from the presidential budget for the last two years, but the money is not enough
to cover their expenses. The central government doesn’t send what the passport
and residency office needs to sustain itself. For example, when the local
forces’ salaries were raised, the central government sent only 30 billion, so
the Kurdistan Region had to add another 20 billion to cover the pay raises. The
same is seen with the teachers’ overtime work.  Baghdad sent only 14 billion,
but we had to add another 10 billion. The money sent by the central government
is a loan and we have to reimburse them by the end of the year.
“Every year, most of Kurdistan’s budget goes to salaries.”
Rudaw: Every month, an amount of money is taken from the paycheck of government
employees for their pensions. Is there a monetary fund to save this money or do
they receive their pension from the general budget?
Bayz Talabani: Every month, 7 percent of government employees’ salaries is
taken away and the government adds 12 percent to it. That money needs to go in a
monetary fund. Kurdistan Region doesn’t have this, but Iraq used to have a
monetary fund. The government expends retirement salaries from the Ministry of
Finance’s budget.
Rudaw: Don’t you think the lack of this monetary fund in Kurdistan hurts the
general budget?
Bayz Talabani: No, it doesn’t have any impact on the budget.
Rudaw: It is said that there are too many government employees in Kurdistan. How
many of them are there?
Bayz Talabani: There are nearly 600,000 government employees in Kurdistan.
Having that number of people to pay salaries to has caused the price of goods in
the markets to go up. Every year, most of Kurdistan’s budget goes to salaries.
The total number of people who receive salaries is 1.5 million.
Rudaw; People complain that their salary is too low compared with the cost of
living. Is that why they are asking for raises?
Bayz Talabani: I believe that prices need to be monitored instead of raising
salaries. The more the salaries rise, the more the market prices go up.
Rudaw: Some budget experts believe the Kurdistan Regional Government (KRG) does
not have a spending plan.
Bayz Talabani: The government has plans, but the current situation in Kurdistan
is unique and it takes time to resolve everything. It’s true that a huge
number of employees cause market prices to rise, but people pressure the
government to employ them. Look at the neighbors of Kurdistan; no country cares
for the disabled the way Kurdistan does. I don’t think it’s a good idea to
give a salary to whoever asks for it.
Rudaw: There is a lot of debate about local revenues. Is it really only 400
million Iraqi Dinar annually, which has been mentioned in the Kurdistan budget?
“Look at the neighbors of Kurdistan; no country cares for the disabled the way
Kurdistan does.”
Bayz Talabani: The budget is supplementary, that’s why the revenue comes from
the supplementary account and that account has already been submitted to
Parliament. For example, the supplementary account of 2010 is currently under
examination. When the finance department examines and follows up on the
supplementary accounts no one can say those numbers are incorrect. Neither I, as
the Minister of Finance, nor any official from the Finance Ministry, can change
the numbers, especially since the central government’s Finance Ministry is
supervising local revenue. We don’t have secret local revenue. They’re all
on the record.
Rudaw: From the supplementary account of 2010, which is currently in Parliament
for approval, more than 1 trillion Iraqi Dinar is missing. Where is this money?
Bayz Talabani: The money has not been stolen.
Rudaw: What happened to then?
Bayz Talabani: In 2009, when Parliament approved the budget my ministry had a 1
trillion Iraqi Dinar shortage from the Peshmarga budget, so we used local
revenue to fix it.
Rudaw: According to the budget law, the budget revenue shouldn’t be
transferred to a spending budget?
Bayz Talabani: That’s not transferring a budget. If the investment remains in
the account until the last day of December, then the money returns to the
Ministry of Finance. The money has not been stolen. How can you fill that
shortage without this money? I expect more shortage this year because Parliament
decided to save that money in an account which was not spent before December
31st and that hasn’t happened yet.
Rudaw: A MP from the Kurdistani bloc says the Kurdistan Democratic Party (KDP)
“is preventing the 2012 budget from being submitted to Parliament.” Is this
true?
Bayz Talabani: I can say on behalf of my ministry that the KDP didn’t do any
such thing and no one has told us this. I expect this year, the budget will be
sent to Parliament sooner.
“I can say for sure that I have not signed any document to authorize spending
money for KDP and PUK media.”
Rudaw: After Parliament suspended government funding for the media, it’s been
said that some KDP and Patriotic Union of Kurdistan (PUK) media outlets still
receive government funding.
Bayz Talabani: I can say for sure that I have not signed any document to
authorize spending money for KDP and PUK media.
Rudaw: There are rumors that you have decided to resign in the next cabinet.
Bayz Talabani: I have been a Minister of Finance for almost 10 years. There
needs to be a change and for other people to replace us, but if the next cabinet
needs me I am willing to serve.