Five reasons for Kurdistan Region financial crisis

ERBIL, Kurdistan Region (K24) – Hiva Haji Mirkhan, a member of the Kurdistan Parliament financial committee, explained five main reasons for the Kurdistan Regional Government’s (KRG) economic crisis, on Tuesday, in an interview with K24.

Mirkhan stated that there were five principal factors that have pushed Kurdistan Region into an economic hardship since 2014. According to Mirkhan, Baghdad refusal to pay KRG budget share (seventeen percent of the total national wealth), the war against the Islamic State (IS), the large number of refugees and Internally Displaced Persons (IDPs) fleeing to Kurdistan Region because of the war against IS, the decrease in global oil prices, and lastly Kurdistan Parliament’s focus on political issues rather than economy.

The Member of Parliament (MP) emphasized that the costs of war against the IS has put a significant economic burden on Kurdistan Region. She added that Baghdad central government’s refusal to recognize Peshmerga forces as an official entity of KRG in the calculation of budget also brought difficulty to Kurdistan Region in supplying the armed forces with the equipment and mobilization expenses. 

She explained that because Baghdad does not provide the budget for Peshmerga forces, KRG is bound to cut the budget of other ministries to provide the Peshmerga with their salaries.

According to Mirkhan, from the approximate budget of $56 billion for arms purchase by the Iraqi Ministry of Defense for the period between 2007 to the end of 2013, Peshmerga forces had the agreed-upon share of about $9.5 billion, “But we did not receive one thin dime,” Mirkhan said.

She pointed out that Kurdistan Region is hosting nearly 1.8 million refugees and IDPs. The costs of providing healthcare, energy, education, and food are just some factors of pressure on Kurdistan Region’s economy.

Mirkhan stressed the decrease of oil prices has caused many difficulties, especially because Kurdistan Region’s economy relies heavily on oil sales.

Regarding the role of the Kurdistan Parliament Mirkhan clarified that it has focused mainly on political issues in the past. She explained that the laws passed in the parliament need to be modified to protect the private sector in order to attract the interest of workers to this sector.