ERBIL, Kurdistan Region of Iraq - The president and prime minister of Iraq met on Saturday, with both sides agreeing that “radical solutions” must be pursued to end financial disputes between Erbil and Baghdad, days after the federal government announced it would withhold funds from the Kurdistan Region for the remaining eight months of this year.

In a letter addressed to the Kurdistan Regional Government (KRG) on Wednesday, Iraqi Finance Minister Taif Sami said that they are “unable to continue funding the Region.”

The letter argued that the Region has exceeded its 12.67 percent of the annual budget, totaling 13.5 trillion dinars. Sami claimed that from 2023 until April 2025, the Kurdistan Region had handed over only 598.5 billion dinars out of its total combined oil and non-oil revenues of 19.9 trillion dinars.

In today’s meeting, President Abdul Latif Rashid and Prime Minister Mohammed Shia’ al-Sudani agreed that financial issues between Erbil and Baghdad must be resolved under the budget law and the constitution.

"During the meeting, the need to find radical solutions, within the framework of the constitution and the law, regarding the financial obligations between the federal government and the Kurdistan Regional Government of Iraq, was emphasized,” according to the meeting’s readout published by Sudani’s media office.

It added that the two leaders stressed that this "should be done through steps stipulated in the constitution, the budget law, and the Federal Court's decision."

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 forced employees in the Region to live from paycheck to paycheck.

Over 40 political parties in the Kurdistan Region came together on Saturday upon an invitation by the Kurdistan Democratic Party (KDP) to discuss Baghdad’s decision to cut the Region’s budget, unanimously criticizing the federal government’s decision as “political.”

“All options are open to us for the supreme interests of the Kurdistan Region. At the same time, all parties unanimously agreed that this decision is a political decision against the Kurdistan Region,” read a joint statement by the parties.

In the meantime, a senior official from Iraq’s Coordination Framework told The New Region on Saturday that the group is preparing a major initiative to resolve all disputes with the Kurdistan Region.

Mueen al-Kadhimi, a member of the Badr Organization and the parliamentary Finance Committee, said that the initiative aims to fix “all outstanding issues” and create a better environment for cooperation between Baghdad and Erbil.