As the Iraqi Parliament speaker's statements compounded ongoing employees' salary concerns, a 34 trillion dinar discrepancy has emerged between the Kurdistan Region’s legal entitlements and the actual funds received since the ratification of the three-year budget law, representing a 41% receipt metric according to KRG statistics.

While the Kurdistan Region's total allocation for the three-year period was set at 58.3 trillion Iraqi dinars, Baghdad has only remitted 24.3 trillion dinars.

This means the Erbil has received a mere 41% of its mandated entitlements, leaving a shortfall of more than 34 trillion dinars withheld by Baghdad.

KRG Urges Constitutional Solution to Budget Dispute 

The First Deputy Speaker of the Iraqi Parliament, Adnan Faihan al-Dulaimi, requested on Monday that the federal government halt all financial transfers to the Kurdistan pending a final financial settlement.

He conditioned any future funding on strict compliance with budget law clauses, adding that executive authorities face direct legal accountability for any unauthorized clearances to Erbil.

In response to his statement, the KRG Ministry of Finance and Economy rejected his call to halt federal budget transfers, labeling it “surprising” and highlighting that he should seek constitutional solutions to the arbitrary "actual spending" budget clause rather than creating barriers to employees' financial entitlements. 

The ministry affirmed full compliance with the 2019 Financial Management Law and the 2023–2025 federal budgets, despite facing a two-month salary funding shortfall in late 2025. 

Furthermore, the ministry noted that early 2026 revenue transfers were successfully maintained under a temporary 50 percent revenue-sharing agreement designed to offset localized border customs disruptions caused by regional conflict and ASYCUDA implementation delays.

KRG Uses Fiscal Data to Rebut Baghdad

The KRG Ministry of Finance hit back at Baghdad's accusations with data, affirming that it has systematically handed over its non-oil revenues. The total amount of non-oil revenue remitted by the region over the past three years reached 1.709 trillion dinars. 

Regarding the oil sector, the Region delivered 19.5 million barrels of crude oil to the federal State Organization for Marketing of Oil (SOMO) between September 27, 2025, and the end of that fiscal year, without receiving its reciprocal budget shares in return.

While Erbil maintains that it only received 24.3 trillion dinars, the Iraqi Federal Ministry of Finance claims the total stands at 28.7 trillion dinars. 

Budget Dispute Freezes Erbil-Baghdad Financial Equation

Investigations reveal that the surplus amount claimed by Baghdad actually represents employees salary deductions designated for the pension fund, alongside a 3 percent deduction that had been withheld from the Kurdistan Region's employees and retirees over several years, rather than direct liquid funds made available to public sector employees.

During the first five months of 2026, the Kurdistan transferred 443 billion dinars in non-oil revenues to the federal treasury. Additionally, throughout January and February, Erbil delivered over 200,000 barrels of oil per day directly to Baghdad.

In return, Baghdad only released funding to cover employee salaries for those five months, while continuing to withhold 100 billion dinars earmarked for retiree entitlements. 

This ongoing strain signals that the bilateral financial equation remains frozen between legislative mandates and political conflict.