Council of Ministers announces measures to address financial crisis

Erbil, Kurdistan Region, Iraq (cabinet.gov.krd) – In a cabinet meeting yesterday, the Kurdistan Regional Government discussed a set of measures to address the current financial crisis, facing the Kurdistan Region.

The cabinet agreed to implement a specific set of measures of reform to reduce costs while having the least possible impact on the citizens.

In a press conference held following the meeting, the KRG Spokesperson Safeen Dizayee and the Council of Ministers Secretary Amanj Rahim announced the reforms.

The measures include implementation of a fair system of savings of a designated percentage of all governmental salaries and bonuses, excluding Peshmerga, Security and other special forces. This will enable regular and timely payment of public employees’ salaries. The amounts will be saved and owed by the Ministry of Finance and Economy as of first of January, 2016 and will remain along with the outstanding amounts from 2015 until a time when the situation is normalised.

All repayments of citizens’ loans to the government will be suspended.

The measures also include formation of a committee to supervise all oil and gas revenue accounts and the entire oil and gas processes, with assistance of an international financial auditing company with the aim to separate the financial areas of the oil and gas sector from the Ministry of Natural Resources until the establishment of the Board of Oil and Gas Income. The Committee comprises members from the Board of Supreme Audit, the Secretariat of Region’s Council for Oil and Gas, the Ministry of Finance and Economy and the Ministry of Natural Resources.

It was also decided that all sales, purchase and exchange processes of crude oil and its refined products, aside from the crude oil which is exported through Kurdistan’s pipelines, will be done through public bidding and open tendering to provide equal opportunities to all companies and contractors for the best price at the highest quality without favour or preference. The Ministry of Natural Resources is required to prepare and begin implementing new regulations to this effect within 30 days and the process with be audited by the Board of Supreme Audit.

The relevant Ministries, Governorates and Mayors, in coordination with Chambers of Commerce and Market Supervisory Councils, are requested to supervise the price of daily goods and services to balance price with the income of the general public, in particular food prices, health services, property rent, private schools and nurseries, Internet services and electricity, including private generators. For this purpose, the Council of Ministers has delegated authority to the relevant Ministries and Governorates.

These measures are part of the KRG’s ongoing efforts to address the financial crisis, which has created a huge imbalance between expenditure and income in the Region’s budget, caused by Baghdad’s withholding of Kurdistan’s share from the Federal Budget since February 2014, the war against the Islamic State terrorist group, ISIS, the influx of a large number of refugees and internally displaced persons and the recent sharp fall in the oil price.

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