Peregraf
Tensions between the Kurdistan Regional Government (KRG) and the federal Iraqi government intensified today, as both sides issued conflicting statements over the fate of public sector salaries in the Kurdistan Region — deepening a months-long financial crisis with far-reaching political implications.
In a sharply worded statement, the KRG Ministry of Finance accused Baghdad of breaching the Iraqi constitution by determining the Region’s budget share based on actual expenditures rather than legal entitlements. “The path taken by your ministry is contrary to the constitution,” the KRG said in response to a letter from the Iraqi Ministry of Finance, which had claimed the KRG has already received more than its share.
According to KRG figures, Baghdad was required to send 13 trillion, 334 billion, 587 million dinars to the Region for the full year 2025. So far, only 4 trillion, 223 billion, 625 million, 165 thousand dinars have been transferred — leaving more than 9.11 trillion dinars unpaid. The KRG maintained that this shortfall is unjustified and endangers the livelihoods of over a million public employees and pensioners.
Meanwhile in Baghdad, the Iraqi Ministry of Finance issued its own statement earlier today, asserting that the Kurdistan Region has no further budgetary entitlement due to its alleged failure to deliver oil and non-oil revenues to the federal treasury. The ministry pointed to the ruling of the Federal Supreme Court and insisted that the KRG had surpassed its constitutional share of 13.547 trillion dinars for the current fiscal year.
The federal ministry also criticized the KRG for refusing to implement the Tawtin banking system, which aims to digitize and regulate salary payments. “The decision to suspend transfers is in accordance with the law and the court’s ruling,” the ministry declared.
The dueling statements sparked strong reactions across the political spectrum. Kurdish factions in the Iraqi Parliament called the federal finance ministry’s actions a “policy of starvation” and demanded urgent intervention by Prime Minister Mohammed Shia’ al-Sudani. In a joint statement, they described Baghdad’s move as a violation of the constitution and warned that their cooperation with the federal government would be reassessed.
The Kurdistan Democratic Party (KDP) also issued a stern warning, demanding that the federal government release the salaries before Eid al-Adha or face “a serious political response.” The KDP accused Baghdad of politicizing public livelihoods and violating the principles of the government formation agreement. The matter is expected to dominate the party’s Central Committee meeting on June 2.
As the political rhetoric escalates, the real impact is already being felt on the ground. Civil servants in the Kurdistan Region remain unpaid for May, and with eight months left in the year, concerns are mounting over a prolonged financial freeze.
With no breakthrough in sight, today’s statements mark a new low in Erbil-Baghdad relations — one that threatens not only government functionality but also public trust and economic stability across Iraq.