Kurdistan's salary crisis since May 2025: What We Know So Far?
Since May 2025, the Kurdistan Region has been grappling with a deepening salary crisis following a decision by Iraq's Ministry of Finance to suspend salary transfers to the Region.
The ministry cited that the Kurdistan Regional Government (KRG) had exceeded its allocated federal budget share. According to official data, the KRG's actual expenditures reached 13.547 trillion Iraqi dinars (approximately $10.23 billion), surpassing the 12.67% share stipulated in the 2023–2025 federal budget law.
The move drew strong criticism from the KRG, which accused the Iraqi government of pursuing 'deliberate starvation and systematic extermination' policies against the Kurdish population.
The crisis intensified tensions between the two sides over financial entitlements and constitutional responsibilities.
A step toward resolution came on July 16, when Baghdad and the KRG reached a financial agreement focused on public sector salaries. The deal linked salary disbursement to the Kurdistan Region's compliance with federal oil export mandates. KRG welcomed the new deal.
As of July 17, the Iraqi government required the KRG to deliver all oil production to the State Organization for Marketing of Oil (SOMO). Under the agreement, the KRG must export a minimum of 230,000 barrels per day, with additional production also included. In exchange, the Ministry of Finance would provide an advance of $16 per barrel, either in cash or in kind, in accordance with the revised budget law.
If exports are halted for any reason, the same quantity must be delivered directly to the federal Ministry of Oil. Additionally, 50,000 barrels per day will be allocated for local use within the Kurdistan Region. The KRG is responsible for production and transport costs, while revenues from refined product sales must be transferred to the federal treasury after deductions.
To help meet local fuel needs, the Ministry of Oil is also expected to supply the Region with refined fuel equivalent to 15,000 barrels of crude per day, based on a joint assessment within two weeks.
The agreement also required the KRG to transfer 120 billion Iraqi dinars in non-oil revenues for the month of May. The Ministry of Finance stated that salary disbursement would not begin until confirmation of full oil quota delivery via SOMO—through the port of Ceyhan in Turkiye—and receipt of the non-oil funds.
On July 19, Finance Minister Taif Sami addressed the Iraqi Parliament's Finance Committee, reaffirming that disbursement of May salaries remains conditional upon full compliance with the terms of the agreement.
In line with these conditions, the Kurdistan Region's Ministry of Finance and Economy announced on July 22 that it had deposited the May non-oil revenues—amounting to 120 billion dinars—into the federal government's account at the Erbil branch of the Central Bank of Iraq.
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