A source within the Kurdistan Regional Government's (KRG) Ministry of Finance and Economy said that Erbil and Baghdad are in talks to ensure that remitting the full 120 billion dinars of non-oil revenue is not made a mandatory condition for releasing salary funds.

According to the agreement between both sides, the KRG must send 120 billion IQD in non-oil revenues to Baghdad each month as a strict condition before the federal government releases the Kurdistan Region’s public sector employees' salary funds.

Erbil Proposes Monthly Balance Review 

The source told Channel8 that the KRG Council of Ministers remains in continuous communication with Iraqi Prime Minister Ali Faleh al-Zaidi, adding that Erbil is requesting that if a lesser amount is remitted, the federal government should not deduct the difference from the salary budget.

The KRG has expressed readiness to hand over half of its non-oil revenues to Baghdad, provided the final amount is determined by actual monthly trial balances rather than a fixed sum. 

This proposal follows an incident last month where Erbil remitted 50 billion IQD, prompting Baghdad to deduct the remaining 70 billion IQD from the payroll funding. This federal deduction created immediate financial shortfalls for public sector employees whose salaries depend directly on local revenue.

Revenue Dispute Threatens Monthly Pay for KRG Workers 

Channel8 has learned that the local revenue dispute directly impacts the livelihoods of 75,000 contract employees and teachers.

Because the Iraqi federal government does not fund this specific group, the KRG must allocate approximately 45 billion IQD monthly from local revenues to cover their salaries. 

Consequently, any future federal budget deductions under the pretext of revenue shortfalls pose a direct threat to these workers' pay.

Drop in KRG Non-Oil Revenue Prompts Call for Realistic Budgeting 

Highlighting a 70% decline in internal non-oil revenues due to delays in implementing the ASYCUDA customs system, the KRG has urged Baghdad to adopt a pragmatic financial approach to shield citizens and civil servants from the fallout of the resulting budget discrepancies.

This drop, verified by the KRG’s General Directorate of Accounting, stems from administrative changes between Erbil and Baghdad that hinder the ability to meet projected revenue targets.