The top court last month ordered the Kurdistan Regional Government (KRG) to submit a breakdown of the monthly budget for the Region’s employees’ salaries to the federal finance ministry so that Baghdad could start paying the Region’s share from the federal budget. The ruling mandates the Kurdish government to open accounts for its employees at state-owned banks – a process dubbed “localization” by Baghdad.
“The Federal Ministry of Finance and the Ministry of Finance and Economy in the Kurdistan Regional Government must accelerate and make efforts to achieve the localization process,” said a statement from the Iraqi top court.
“The salaries of the remaining employees whose localization process has not been completed for technical reasons must be paid in cash” until the process is completed, the statement added.
On Tuesday, Iraq’s finance ministry announced it had begun sending Erbil’s civil servants’ salaries for the month of February in compliance with the recent Iraqi top court ruling.
The KRG finance ministry responded, lamenting that Baghdad’s payment of 560 billion dinars is 390 billion dinars short of the Region’s total requirements for salaries, which is around 950 billion dinars.
“The Iraqi government has deposited only 59 percent of the total salaries into our account. This measure will create a deficit of 390 billion dinars,” the KRG finance ministry said in a statement.
Baghdad stressed that salary payments for March will only take place once Erbil meets the salary settlement requirements, referring to the opening of bank accounts for KRG employees.
Civil servants in the Kurdistan Region still receive their monthly wages in cash. In line with its digitalization campaign, the KRG in October launched of the “My Account” initiative aimed at digitizing the banking sector in the Kurdistan Region. As part of this project, the Region’s employees would see their salaries deposited in their accounts rather than receiving them in cash. Out of more than a million civil servants, bank accounts have been opened for only 220,000 employees so far and only around 100,000 of them have received their bank cards.
Iraq passed its highly contentious budget bill in June for the years 2023, 2024, and 2025, of which the Kurdistan Region's share is 12.6 percent but Erbil has accused Baghdad of not sending its share on time. Baghdad has claimed it has fully implemented its financial obligations to the KRG, including through loans to assist the Region in paying the salaries of its civil servants.
In a recent blow to the KRG, Iraq’s top court ruled that the Region’s oil and non-oil revenues must be handed over to Baghdad. In addition, all salaries are to be paid directly by the federal government, rather than by Erbil.
