Iraqi cabinet approves budget agreement with KRG after months of delays to public sector salaries

BAGHDAD — Iraq’s Council of Ministers on Thursday approved a joint agreement with the Kurdistan Regional Government to resume public sector salary payments in the Kurdistan Region, ending months of financial deadlock that left thousands of Kurdish civil servants unpaid.

The approval follows prolonged disputes over oil revenue transfers and budget allocations that began in late May, when Baghdad halted budget disbursements to Erbil. The federal Ministry of Finance accused the KRG of exceeding its 2025 budget allocation and failing to submit verified data on oil and non-oil revenues. KRG officials have rejected those claims, calling the freeze “unconstitutional” and “politically driven,” and insisting they had met all their financial obligations.

KRG public employees have yet to receive their salaries for May and June, with delays now approaching 80 days and plunging many families into financial hardship.

According to Iraqi lawmaker Soran Omar, Thursday’s agreement will remain in effect until Dec. 31, 2025. “From now until the end of the year, the KRG will deliver 220,000 barrels of oil per day from its fields,” he said, noting that the crude will be marketed exclusively through Iraq’s state oil firm SOMO, aside from any additional revenue generated beyond that threshold.

The agreement also sets aside 50,000 barrels per day for domestic use within the Kurdistan Region, on the condition that the KRG bears the cost of production. Should further supplies be needed, the federal Oil Ministry will provide additional quantities equivalent to the output of 15,000 barrels per day, pending assessment by a joint technical committee. The panel is to submit its findings within two weeks.

On the non-oil side, the KRG agreed to transfer 120 billion dinars (about $85.7 million) in monthly domestic revenues for May and June to Baghdad. A joint audit committee from both governments will be formed to verify the figures and determine the federal government’s share, with a deadline of one month.

Based on the new arrangement, the federal Finance Ministry is expected to begin disbursing overdue salaries to KRG public employees, covering May, June, and subsequent months.

KRG Prime Minister Masrour Barzani welcomed the deal. “After our government fulfilled all its obligations and pursued extensive negotiations to reduce pressure on the people of Kurdistan, we welcome today’s approval by the federal cabinet,” Barzani said in a statement.

“We have great appreciation for the resilience of the Kurdish people. I extend my gratitude to everyone who worked to resolve this issue and stood with us. I hope the salaries and financial entitlements, which are the legitimate rights of our people, will no longer be caught in political disputes.”

Barzani also urged Baghdad to confront those behind recent drone attacks on oil infrastructure in the region. “We hope the federal government will cooperate in identifying and legally confronting those behind these violations,” he said.

The agreement follows the KRG Council of Ministers’ announcement on July 16 that it had approved a new “mutual understanding” with Baghdad on salaries and revenue sharing. The breakthrough came after high-level talks in the capital and mounting pressure over unpaid wages.