Bundles of 25,000 Iraqi dinar notes sit on a counter. Photo by 964media
KRG weighs spending cuts, partial salary payments as Baghdad budget standoff continues
ERBIL — The Kurdistan Regional Government is preparing to implement spending cuts and may disburse only partial salaries to public employees, amid mounting pessimism over the resumption of full budget transfers from Baghdad, according to officials familiar with internal discussions.
Two senior KRG officials told 964media that the Council of Ministers is expected to approve cost-saving measures during its upcoming meeting, including restrictions on project budgets, limits on official delegations, and reductions in allowances for ministers and top officials. A final decision on salary disbursements is expected soon.
“There’s a strong possibility that the Council of Ministers will decide to distribute only a portion of salaries, though this has not been fully confirmed by all parties involved,” one source said.
The internal deliberations follow recent remarks by Iraqi Prime Minister Mohammed Shia Al-Sudani, who, according to two sources, told KRG officials, “Do not wait for your salaries to be sent. You should worry about your own salaries.”
The pending decisions come as a financial standoff between Erbil and Baghdad continues. The federal government suspended salary transfers to the Kurdistan Region in May, accusing the KRG of exceeding its share of the 2025 federal budget and failing to submit full revenue data. KRG officials have rejected those accusations.
In response, KRG Prime Minister Masrour Barzani described the refusal to send funds as “illegal and unconstitutional” and said his government had submitted a formal complaint to Iraq’s Federal Court.
Senior KRG sources told 964media that the Council of Ministers is expected to approve a package of measures during its Wednesday session. The proposed steps include reductions in general expenditures, restrictions on ministry projects and official delegations, cuts to allowances for senior officials, and salary disbursements based strictly on available funds.
“If nothing changes by tomorrow, the decisions will likely be as follows,” one official said. The expected measures include:
- Curtailing general expenditures, including ministry project budgets and delegation costs.
- Halting or limiting allowances for ministers and other senior officials, with changes potentially taking effect as early as Tuesday.
- Disbursing only a portion of public sector salaries, depending on actual revenue.
One of the sources said there is a likelihood the council will approve plans to disburse salaries in reduced amounts based on available funds. However, the second source did not confirm this information. A final decision on the salary issue is expected at Wednesday’s cabinet session.
“The Kurdistan Regional Government has fully complied with its constitutional obligations and expects its constitutional rights to be respected and its financial entitlements delivered,” Prime Minister Barzani said following last week’s cabinet meeting.
Budgetary disputes between the KRG and Iraq’s federal government have persisted since 2014, often resulting in delayed or incomplete salary payments to Kurdistan Region public employees. The crisis has been compounded by ongoing disagreements over oil revenue sharing and budget allocations, fueling public frustration and protest.