ERBIL, Kurdistan Region of Iraq - The Kurdistan Regional Government (KRG) on Wednesday described the Iraqi federal government’s decision to suspend the Region’s civil servant salaries as a “collective punishment,” emphasizing that Erbil has fulfilled all its obligations toward Baghdad.

The KRG Council of Ministers held a meeting on Wednesday, chaired by Prime Minister Masrour Barzani, discussing the latest developments in the budget issues between Erbil and Baghdad, the status of contract employees in the Kurdistan Region, and Eid al-Adha holidays.

The Iraqi finance ministry last week said it will suspend funding the Kurdistan Region for the remainder of 2025, claiming that the Region has already exceeded its share of the annual federal budget.

The Kurdish premier said that “the Kurdistan Region has fully implemented its obligations and transparently presented all financial data and information to the joint team of the two federal and regional financial supervision offices,” according to a statement from the KRG.

The fair distribution of the Kurdistan Region’s share of the federal budget has long been a point of contention between Erbil and Baghdad.

In early February, KRG’s Finance Minister Awat Sheikh Janab announced that they had reached an agreement with the Iraqi federal government to finance the salaries of the Region's civil servants for the entirety of 2025 "without any issues.” 

During Wednesday’s meeting, Barzani said February’s agreement is based on rulings from the Iraqi Federal Supreme Court which prohibit using budget issues between Erbil and Baghdad as an excuse to stop financing civil servant salaries, also noting that the Iraqi constitution has established the principle of treating all the people of Iraq equally.

“The livelihood of the Region’s salaried employees must not be suspended for the next eight months under any pretext, especially when there are a few days left before the holy Eid al-Adha.” the statement added citing Barzani.

“The federal government with this political decision imposes sanctions on the Region, and this decision is a collective punishment for all citizens of the Region,” the statement added citing Barzani.

The Kurdish cabinet deemed the move “unconstitutional” and “illegal”, calling on the Iraqi government to review the finance ministry’s decision and implement the bilateral agreement signed earlier this year.

“It was also decided to send an official letter to the international community and representatives of countries to explain the constitutional, legal, and financial aspects and request coordination and support to resolve the salary problem within the framework of the constitution,” the KRG statement added.

Years of conflict and unresolved issues between Erbil and Baghdad, and economic sanctions and pressure on Erbil by federal authorities, have pushed employees in the Region to live from paycheck to paycheck.

The Iraqi finance ministry’s decision has sparked outrage among Kurdish officials both in Baghdad and Erbil. Iraqi Foreign Minister Fuad Hussein and Construction Minister Bangin Rekani – Kurdish ministers in the federal government - did not attend Tuesday’s meeting of Iraq’s Council of Ministers as a stance against the decision.