Page 11 - MEOG Week 25 2021

MEOG POLICY MEOG

Kurdistan hails deal to

unlock budget payments

IRAQ KURDISTAN Regional Prime Minister Mas- many in Baghdad as unconstitutional and in late
rour Barzani this week said that a deal has been January, 113 MPs, most of them Shi’ite, wrote
agreed between the regional government (KRG) to the head of the parliament to ask that budget
and Baghdad that will see budget payments to article 11 be redrafted to force Erbil to provide all
Erbil resume. output to SOMO.
Writing on Twitter, Barzani said: “I spoke It suggested that section 2a of article 11
with Prime Minister Mustafa al-Kadhimi today should read: “The Kurdistan region will abide by
as part of our ongoing talks and shared commit- sending 460,000 barrels of oil per day to SOMO,
ment to bring certainty to the Erbil-Baghdad and in case of overproduction, they abide by
relationship. I’m pleased to announce we’ve sending the excess amount to SOMO as well.”
reached a deal that will see federal budgetary While the KRG was never likely to agree to this,
payments restored to the KRI and backdated to Erbil has committed to a minimum production
January 2021.” level of 460,000 bpd.
He added that during the call “I thanked As in previous budgets, the 2021 budget pro-
him for his leadership and the federal cabinet vides for the KRG receive 12.67% of the total,
for its support for this important milestone. We with this contingent on it handing over the net
overcame this difficult, long-standing obstacle revenues from 250,000 bpd of oil exports to
together.” Iraq’s State Oil Marketing Organization (SOMO)
In late March, Iraqi MPs approved the major- and giving the revenues to the central treasury.
ity of articles, allowing the 2021 budget to pro- Despite passage of the bill nearly three
ceed following months of wrangling between months ago, Erbil has not received any payments
Baghdad and the KRG. from Baghdad and has so far failed to provide
The agreement pegged the 2021 budget at SOMO with any crude.
IQD130 trillion ($89.65bn) with a deficit esti- However, in mid-May, Kadhimi said that
mated at IQD28.7 trillion ($19.79bn). With the relations between federal and regional authori-
country 97%-reliant on oil exports, the budget is ties have entered a “golden era” and noted that
based on an oil price of $45 per barrel with total he and Kurdish leaders had worked to “bridge
exports averaging 3.25mn barrels per day (bpd). an understanding between” them.
After numerous voting delays and heated Despite the positivity emanating from Erbil,
exchanges between political factions, agree- the news was met with anger in Baghdad as
ment was reached on major stumbling blocks, the parliamentary integrity committee warned
predominantly the KRG’s revenues from oil “against taking this step in violation of the law,
exports and non-oil revenues, including customs and calls on the public prosecution to take the
fees and taxes. necessary action in the event of the release of
Articles 10 and 11 of the budget dictate Erbil’s these funds.”
share of the budget and have been the key areas It called on the Council of Ministers to be
of issue. careful when taking decisions and to communi-
Kurdish oil exports have long been seen by cate their compliance with the law.™

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