ERBIL, Kurdistan Region - The Kurdistan Regional Government’s (KRG) continued failure to pay its civil servants on time has taken a heavy a toll on the market movements in Erbil, with businessmen and shopkeepers arguing that if it had it not been for Arab customers, their markets would have long seen serious financial damage.
The Kurdistan Region’s civil servants went unpaid for around 90 days, before a deal was struck between Baghdad and Erbil in mid-September, in which the federal government agreed to lend the KRG 2.1 trillion Iraqi dinars to pay the salaries for three months.
The delay in paying salaries has exacerbated the concerns of the Kurdistan Region’s civil servants, many of whose livelihoods depend solely on state wages. Workers of several sectors have gone on strike in Sulaimani and Kirkuk provinces, including teachers and health workers.
Faisal Hamad, who has been working at the Kurdish capital’s Qaysari Bazaar for over two decades, says they have never seen the famed market as empty as it is now, to the point where shopkeepers struggle to meet their daily expenses.
“In the past, when we used to export our own oil, things were much better than they are now. But since Baghdad took control, the market has struggled,” said Hamad, a shopkeeper.
“For instance, today, I have only managed to sell four items, all of which were purchased by Arab buyers. It is the start of a new season, and the market should not be this empty," he added.
The shopkeepers are attributing the market slowdown to salary delays and uncertainty about the future of the financial situation amid the Erbil-Baghdad budget quagmire.
Sarwan Hoshyar, the owner of one of Erbil's largest supermarkets, said his daily sales have experienced an approximately 50 percent drop in recent months.
"If this continues, we might not be able to sustain the business for another three months because if we incur losses for one month, it is a double loss, and for three months, it becomes unsustainable," said Hoshyar.
Iraq announced that the 2.1 trillion dinars will be paid in three equal installments and will cover the salaries of September, October, and November. However, the KRG has used the first 700 billion dinar installment of the loan to pay the salaries for July. The civil servants have not been paid for August either.
The Kurdish government has failed to pay its civil servants on time and in full for nearly a decade due to the financial crisis. Economic woes in the Kurdistan Region have worsened in recent months after Turkey suspended the flow of Kurdish crude oil through the Iraq-Turkey pipeline to its Ceyhan port in March following a ruling from a Paris arbitration court, causing the KRG billions of dollars in losses.
