BAGHDAD, Iraq – Iraqi Prime Minister Haider al-Abadi blamed the worsening financial crisis in the Kurdistan Region on Kurdish authorities, suggesting that lack of transparency has made it difficult to track revenues from Kurdistan Regional Government (KRG) oil exports.
He also said that the Kurdistan Region exports more than its fair share of Iraq’s oil.
“We in Iraq are able to pay the salaries to this date with difficulties, and we are generally managing the country’s economy with difficulties too,” Abadi told reporters on Tuesday when asked about disagreements between Baghdad and Erbil and the cuts to the Kurdish budget made by his government.
“But we are capable of heading the country’s economy, and that needs transparency. The first question is where is the oil money and where is it going to? We are putting the oil money in an Iraqi fund, which the central bank receives in an account that is under its control and the finance ministry,” he said, adding that all the financial institutions, including the International Monetary Fund (IMF) and the World Bank, have access to these figures.
The KRG has said Baghdad’s freezing of its budget since February 2014, combined with low oil prices, has made it difficult to pay the salaries of public servants. Public salaries are often delayed and not paid in full.
“This level of clarity must be exercised in every place, including the Region. We are now calling for transparency and clarity so that we understand where this amount of money is going to. If the Region has some rights withheld by us, we will pay, and if the rest of Iraq has some rights withheld by the Region, they should pay, so that there will be a balance in this issue,” Abadi said, pointing out that he cannot do this all by himself as the Iraqi prime minister but that this should be done in cooperation between Erbil, Baghdad, and the people.
The KRG, mainly under pressure from international oil companies operating in Kurdistan and public anger over delayed salaries, signed two agreements in early October and November last year with two international financial institutions, Deloitte and Ernst and Young, to audit the region’s oil and gas sector.
Prime Minister Nechirvan Barzani said the agreements will help increase transparency.
“The agreement will further strengthen the transparent and independent auditing process for the oil and gas sector,” Barzani said in a statement released by his office following signing the agreement with Ernst and Young, adding that “Transparency in the sector is his government’s top priority.”
“The Kurdistan Region exports more oil than the proportion of its population in Iraq,” Abadi said. “This is not a claim or an estimate. It is rather based on official figures – although there are unofficial figures that the Region exports oil in other ways and I am not talking about this here, but it exists, too. I am talking about official figures for oil export through the Turkish pipeline. We are receiving the figures on daily and monthly bases for the oil exported through Ceyhan port. What the Region exports is more than its share, which is 17% of the oil. This means the situation of the Region should be better than Iraq’s in terms of the salaries.”
The Kurdistan Region exported an average of 587,646 barrels per day in November for a monthly total of 17,629,368 to Turkey’s Ceyhan port, earning a net income of $374.5 million. Figures for December have not been released yet.