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Despite one payment, Baghdad-Erbil budget stalemate continues

Officials on both sides say a July financial transfer was a one-off deal, as political and technical disputes hold up further federal budget payments for Kurdistan.
KRG Prime Minister Masrour Barzani (right) receives Iraqi Prime Minister Mustafa al-Kadhimi (left) in Erbil on September 10, 2020. (Photo credit: Kurdistan Regional Government)

WASHINGTON/ERBIL - The Iraqi federal government's recent transfer of 200 billion Iraqi dinars ($138 million) to the semi-autonomous Kurdistan Regional Government (KRG) was a one-time payment rather than the start of monthly budget disbursements, according to multiple officials from both sides.

The financial transfer on July 10 initially raised hopes that the Iraqi government might be implementing a Cabinet order from mid June that authorized both monthly payments of Kurdistan's share of the federal budget going forward and backdated payments for the first half of 2021. Such a breakthrough deal had the potential to ease financial pressure on the KRG, helping it to pay salaries to public-sector employees, maintain social stability, and provide reassurance to oil companies invested in Kurdistan that have suffered from payment delays.

The latest financial transfer from Baghdad — the first in nearly a year — was actually the result of a second Cabinet decision in early July that makes no guarantee of regular budget disbursements, because the two sides have not yet agreed on how to calculate exactly how much the KRG is owed, if anything.

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