KRG: Baghdad’s budget policies cut Iraqi Kurdistan’s funding share
Shafaq News- Erbil
Structural deductions built into Iraq’s federal budget, together with the use of an “actual spending” formula, have steadily reduced Iraqi Kurdistan’s share of public funds over the past two decades, the Kurdistan Regional Government (KRG) said.
According to a report issued by the KRG’s Department of Media and Information, while Kurdistan contributes to Baghdad’s sovereign expenditures at a rate of 12.67%, which are estimated at about 8.7 trillion Iraqi dinars ($5.81B) annually, it does not receive benefits from sovereign spending in proportion to the amounts deducted from its allocation.
Outlining a sharp expansion in deductions between 2005 and 2025, the report noted that in 2005, the federal budget remained relatively small and sovereign costs accounted for a limited portion of total spending, however, by 2025, overall expenditure had reached roughly 199 trillion dinars ($132.84B), with sovereign deductions rising to nearly a quarter —and at times close to one third— of the budget, or about 50 trillion dinars ($33.38B), before calculating the shares of Kurdistan and other provinces.
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The Kurdistan Region, the document added, carries a disproportionate share of federal debt, as for every dollar allocated to Kurdistan in loans for service projects, it effectively contributes the equivalent of 26 dollars toward servicing federal liabilities, most of which were accumulated outside the Region.
It also cited Baghdad’s reliance on the “actual spending” mechanism, rather than the allocations specified in the federal budget law, as another factor reducing regional revenues. Transfers under this approach are based on amounts disbursed in practice rather than the Region’s full legal entitlement, producing recurring gaps in distribution.
These combined measures have gradually reduced the Kurdistan Region’s share of the federal budget, while it continues to bear a significant portion of Iraq’s sovereign financial obligations, the report concluded.
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