ERBIL, Kurdistan Region of Iraq - The Iraqi finance ministry on Wednesday alerted the Kurdistan Regional Government (KRG) that it will no longer fund the Kurdistan Region, claiming that the Region has already exceeded its share of the budget for 2025, and failed to hand over its revenues to the federal government.

In June 2023, Iraq passed its federal budget law for the years 2023, 2024, and 2025. The budget includes an annual $152 billion in spending, of which the Kurdistan Region’s share was set at 12.67 percent.

In a letter addressed to the KRG on Wednesday, Iraqi Finance Minister Taif Sami said that, from 2023 until April 2025, the Kurdistan Region has handed over only 598.5 billion dinars out of its total oil and non-oil combined revenues of 19.9 trillion dinars.

Sami claimed that the Kurdistan Region has already exceeded its 12.67 percent of the annual budget, totaling 13.5 trillion dinars, adding that the finance ministry “is unable to continue funding the Region.”

The Iraqi budget law commits the Kurdistan Region to handing over 400,000 barrels of oil to Iraq’s State Organization for Marketing of Oil (SOMO) to be exported, or used domestically if it is not exported. It also obliges the Kurdistan Region to hand over its non-oil revenues to Baghdad in exchange for disbursing the Region’s monthly financial entitlements.

“This topic requires a new stance and resistance and jeopardizes 8 months worth of salaries of the people,” decried Soran Omar, a Kurdistan Justice Group (Komal) MP in the Iraqi parliament, in a Facebook post.

The fair distribution of the Kurdistan Region’s share of the federal budget has long been a point of contention between Erbil and Baghdad.

Years of conflict and unresolved issues between Erbil and Baghdad, and economic sanctions and pressure on Erbil by federal authorities, have pushed employees in the Region to live from paycheck to paycheck.

“Our problems will be solved, and the truth will prevail,” said KRG spokesperson Peshawa Hawramani in a statement on Wednesday in reaction to the finance ministry’s letter.

“For sixty years, starvation and extermination have been used as the most heinous methods. The result has been the same: the people of Kurdistan have become prouder and stronger,” he added.

In early February, KRG’s Finance Minister Awat Sheikh Janab announced that they had reached an agreement with the Iraqi federal government to finance the salaries of the Region's civil servants for the entirety of 2025 "without any issues.” 

The announcement came less than a month after Kurdistan Region Prime Minister Masrour Barzani led an irregular meeting of the Council of Ministers with Kurdish ministers in the federal government and heads of parliamentary blocs in the Iraqi parliament, aimed at discussing the next steps for the Kurdish representation in the political process in Baghdad amid ongoing budget issues.

Barzani tasked the Kurdish federal ministers with informing Baghdad that Erbil needs guarantees that 2025 salaries will be paid without any issues and demands its full share of the budget starting 2026, warning of a firmer stance otherwise.