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Kurdistan Regional Government (KRG) Rejects Iraqi 2017 Budget Draft

The $85 billion proposed spending bill which was submitted to the Iraqi parliament in October is expected to draw harsh criticism from lawmakers

ERBIL, Kurdistan Region-- The Kurdistan Regional Government (KRG) says that the Iraqi draft of 2017 budget fails to address the urgent economic hardships that Kurdistan currently faces exacerbated by delayed wages to nearly 1,4 million KRG employees. 

The $85 billion proposed spending bill which was submitted to the Iraqi parliament in October is expected to draw harsh criticism from lawmakers who are currently debating the draft's spending outline. 

In a statement issued on Friday the Kurdish government said the projected budget had overlooked KRG's staggering expenses in financing state employees' wages despite the austerity measures that have reduced their salaries.  

"The Kurdistan Region should not be pushed to a legal commitment under a deal which could in the end harm the Kurdish people's interests rather than serving them," the statement read, an early indication for the KRG to vote down the draft through its lawmakers in the Iraqi parliament later this month. 

"The MPs must have accurate data regarding the actual number of employees and the required budget to ensure payment of their salaries," it said. 

Security spending will increase by 4 percent to 32 percent in the new budget which also includes nearly $5 billion to maintain the controversial Shiite militia known as the Hashd al-Shaabi as part of military spending. 

The projected budget is based on a price of $42 per barrel of oil although the price is likely to hover over $50 per barrel after the historic decision by oil producing nations at the OPEC this week to reduce production and export of the crude. 

Iraqi officials have said any surplus from the increase of oil prices will be used to offset the budget deficit, estimated at $18 billion. 

Iraqi Prime Minister Haidar Abadi has shown strong interest in resuming negotiations with the KRG over lingering oil disagreements which led to deterioration of ties between Erbil and Baghdad following Iraqi government's decision to freeze KRG share of budget in February 2014. 

Baghdad has said it will resume payments to the Kurdistan Region under an implicit deal according to which the KRG would export its 650,000 bpd through the Iraqi government and its oil marketing compony SOMO.

But Kurdish lawmakers have raised doubt over prime minister's ability to adress the ongoing economic crunch that has rocked Iraqi finances despite the relative optimism that followed the OPEC decision. 

"The Iraqi central government won't be able to implement this deal. It has already used over $30 billion from its international reserves to bridge its colossal deficit," Iraqi Kurdish lawmaker Tariq Gardi told Rudaw. Source: Rudaw

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