LONDON, United Kingdom - The Kurdish Deputy Prime Minister Qubad Talabani announced on Monday that his government's unpopular austerity measures are expected to continue in 2017, as the Kurdish region still suffers from the impact of low oil prices, the war against ISIS, a budget cut from Baghdad and hosting about two million refugees and internally displaced persons (IDPs).
He made the remarks to the annual Kurdistan Oil and Gas conference held in London.
Talabani said that in 2014 Kurdistan Region suffered from triple shocks: the Iraqi budget cut early that year, the war with ISIS that began that summer and the subsequent influx of refugees and IDPs who numbered almost two million, coupled later with "a devastating blow" of low oil prices.
He said these crises forced the Kurdistan Regional Government (KRG) to take measures to reduce the budget deficit, including slashing the salaries of civil servants by one-third, causing widespread demonstrations in some parts of the region, particularly in Sulaimani and Halabja provinces, where schoolteachers have continued to stage protests and strikes for more than two months, affecting 750,000 students.
"Governance is never a popularity contest, and this is particularly true in situations of crises," Talabani said, "Popular support has to be earned through government actions that strengthen credibility and promote participation," he added, as he explained that the KRG has reached agreement with international audit firms to promote transparency in the oil and gas sector, a major source of revenue for the region.
The KRG signed two agreements with Deloitte and Ernst and Young, two major international firms, in October and November, respectively
Restructured government spending, reducing the petroleum subsidies, major overhaul of the electricity sector and KRG reforms have helped the government decrease the budget deficit by 80 percent, from $6.4 billion in 2014 to an estimated $1.3 billion in 2016, Talabani stated.
The KRG struggles to finance the monthly wages to some 1.4 million people on its payroll, with around 730,000 of them directly employed by the KRG, while another 700,000 people have monthly payments from the Kurdish government in pensions, social protection for the underprivileged, student stipends and payments to families of Peshmerga victims, among others.
But the government has an issue with “ghost employees” who are never seen but are registered to receive salaries, and also those who unlawfully receive more than one salary, Talabani noted, "of which we likely have many."
To address this issue the KRG has started a new initiative which biometrically registers the government employees in a three-month window, helping identify those who are currently receiving payments unlawfully.
"Austerity is expected to continue in 2017," Talabani said, "with the ultimate goal of generating an operating surplus in order to restore funding for critical public investments, and over time to repay government's debts, including advances from the banking sector.”