Kurdistan Region cabinet approves plan for economic crisis caused by COVID-19, oil disputes

On Wednesday, the Kurdistan Region’s Council of Ministers issued a set of decisions aimed at tackling the financial crisis caused by the coronavirus, including its effect on plummeting oil prices, and Baghdad's recent decision to suspend payments of the autonomous region's share of the national budget.
author_image Hiwa Shilani

ERBIL (Kurdistan 24) – On Wednesday, the Kurdistan Region’s Council of Ministers issued a set of decisions aimed at tackling the financial crisis caused by the coronavirus, including its effect on plummeting oil prices, and Baghdad's recent decision to suspend payments of the autonomous region's share of the national budget.

Government offices, working at only partial capacity for months as part of anti-COVID-19 measures, will also be reopened on Monday. 

According to a Kurdistan Regional Government (KRG) statement, ministers ordered salaries reduced for government officials such as members of parliament, the Judicial Council, provincial councils, security forces, and that only normal base salaries will be paid to governors and mayors.

The cabinet's new orders are to be implemented according to the Reform Law, approved by the regional parliament in January and the centerpiece of the administration of Kurdistan Region Prime Minister Masrour Barzani before the coronavirus took over the world's headlines.

Read More: Kurdistan PM calls on ministers to implement key reform package

The Ministry of Finance and Economy is charged with submitting a list within 30 days of the salaries of only those registered in the government employee biometric system with a service record attached, an attempt to mitigate effects of so-called "ghost employees." This practice, in which employees use fake or intentionally miscategorized names to clandestinely collected additional salaries, has for years been a chronic form of corruption in the Kurdistan Region and Iraq.

The new orders allow only necessary expenditure of funds on essential government services that include procurement of medicine, medical and laboratory equipment, running prisons and nursing homes, water supply, electricity production, and road construction and maintenance.

The statement stressed the suspension of direct spending by the ministries and full reviews of funds spent on services in the oil and gas sector.

The council also decided to review all border customs fees and rearrange services at the border-crossings checkpoint to eliminate illegal activities that may harm the public or legal trade. It also called for a new tax system to be implemented in accordance with existing regulations on oil and gas firms, internet companies, and other businesses.   

Exemptions on rent payments were also ordered at government’s properties used for trade, industry, and agriculture, as well as tenants whose work has been affected by regulations imposed to curb the spread of the coronavirus in Kurdistan Region and resulting late fees and other fines.

On Tuesday, a KRG delegation led by Deputy Prime Minister Qubad Talabani, returned to Baghdad for the second time in as many weeks for high-level discussions with top officials following the Iraqi Council of Ministers' abrupt order to the federal finance ministry to immediately freeze funds already allocated to the autonomous region.

Read More: KRG delegation heads back to Baghdad for talks on oil, budget freeze

Although Erbil has not announced any results from the intensive rounds of talks in Baghdad last week, Kurdish officials have described them as "positive."

Editing by John J. Catherine