Progress on Kurdistan budget deal, but obstacles remain

SULAIMANIYA - The Iraqi Cabinet on Sunday approved a new transfer of 619 billion Iraqi dinars ($476 million) to the Kurdistan region — an apparent breakthrough that promises temporary financial relief for Erbil and could signal growing political support for amending the national budget law to ease future transfers.

The financial picture is still uncertain, however, in large part because there is no universally agreed framework for paying international oil companies (IOCs) operating under contracts with the Kurdistan Regional Government (KRG). Leaders in Baghdad have held talks with IOC representatives in recent weeks but several major issues remain unresolved.

Nonetheless, Sunday's Cabinet decision appears to be a positive signal for political progress. Unlike recent federal financial support for the Kurdistan Regional Government (KRG) at the end of 2023, which came in the form of loans from state-run banks, the new decision orders a transfer from the federal treasury, according to multiple senior officials at the federal Council of Ministers and a KRG Cabinet official.

"This mechanism is going to be used until the budget law is amended," said a spokesperson for the Iraqi Council of Ministers.