KRG: Baghdad underfunded Kurdistan despite reforms

Shafaq News- Erbil

Baghdad has repeatedly sent Kurdistan less money than agreed despite seven years of financial reforms in the Region, Kurdish Finance and Economy Minister Awat Sheikh Janab declared on Tuesday.

Speaking at the launch of a ministry book reviewing its work since the ninth Kurdistan Regional Government (KRG) cabinet took office in 2019, Sheikh Janab stated that Erbil had moved to reform public finance, customs, taxation, salary distribution, auditing, and budget management. Baghdad “has not honored” any agreement with the Kurdistan Region, but federal non-compliance “worsened” after Kurdistan’s oil exports were disrupted.

In May, the KRG Finance Ministry reported that Baghdad transferred about $674.6 million of the $735.4 million needed for salaries and pensions, leaving a gap of more than $60 million, despite Erbil depositing about $38 million in non-oil revenues to Baghdad. The financial dispute has remained tied to oil exports since the Iraq-Turkiye pipeline shutdown in March 2023, after an arbitration ruling over independent KRG exports.

Exports resumed in March 2026 under temporary Baghdad-Erbil arrangements, but payment terms, contracts, and the pipeline agreement with Turkiye remain unsettled. The KRG has activated the reform law, restructured the customs system, prepared the legal basis to regulate companies, improved tax collection and salary distribution, and strengthened technical coordination with Baghdad, Sheikh Janab explained.

Read more: Into 2026, Baghdad and Erbil face the same disputes—with higher stakes