Prime Minister of Iraqi Kurdistan Masrour Barzani on Thursday demanded amendments to the federal budget law to ensure the smooth flow of funds to the cash-strapped area.
Leading a senior delegation, Mr Barzani arrived in Baghdad and met Iraqi Prime Minister Mohammed Shia Al Sudani and President Abdul Latif Rashid as well as other politicians in a bid to convince the federal government to release more funds.
The delegation included Iraqi Kurdistan's Deputy Prime Minister Qubad Talabani and other senior officials.
The three-province region in northern Iraq is going through harsh times after losing revenue from unilateral oil exports following an International Chamber of Commerce ruling that found Turkey in breach of an agreement with Baghdad by allowing the Kurdistan Regional Government (KRG) to sell crude oil in the international market.
Since the oil flows to Ceyhan in Turkey were halted in March, the KRG has lost roughly $4 billion, leaving it depending on budget transfers from Baghdad that the Kurds say are not nearly enough to pay salaries.
Mr Al Sudani and Mr Barzani “stressed the necessity to find a solution to the legal and financial problems between the federal government and the regional government according to the constitution and law”, said a statement from Mr Al Sudani's office, without providing further details.
On Monday, Mr Al Sudani told local media that “there is nothing in the budget called financing salaries, but it is called financing the share of the Kurdistan Region, which is 12.67 per cent of the total public expenditure, which is sent every month”.
To overcome this problem, he said, the cabinet approves payments to the region as loans to enable it to pay civil servants' salaries.
During a meeting with the Iraqi President, Mr Barzani called for “a radical solution to the region's financial entitlements and the salaries of its employees through amending the budget law”, another statement from President's office said.
In the meantime, Mr Barzani called for an “immediate solution” to pay salaries, it added.
Shortly after arriving Baghdad, the Kurdish region's Prime Minister expressed hope that a deal would be reached.
“I have returned to Baghdad for continued dialogue with Prime Minister Mohammed Shia Al Sudani and leaders from across the political spectrum,” Mr Barzani said on the X platform, formerly Twitter.
“Our aim is simple: defend the constitutional rights of the people in the Kurdistan Region of Iraq.
“We hope to find solutions to the pending problems.”
The arbitration ruling by the ICC, which found that Turkey had broken a 1973 joint agreement with Baghdad, halted about 500,000 barrels of oil per day, some of which was diverted for domestic use. Baghdad and Ankara are still trying to reach a final deal to resume oil exports.
Since then, Baghdad has been sending funds to the region on a monthly basis but not enough to meet its financial commitments.
Last week, the federal cabinet approved a monthly loans of 500 billion Iraqi dinars ($381.7 million) transfer for September, October and November.
But the KRG says that sum is less than the 906 billion dinars needed for salaries each month.
It has asked for a monthly 1.375 trillion dinars from its share of this year's federal budget, which stands at 198.91 trillion dinars – 12.67 per cent of the total.
Like Baghdad, the Kurdistan Regional Government has overspent on public sector salaries by hiring too many staff, which has cut vital spending on services, including education.
Public sector employees have not been paid for the months of July and August. Last week, civil servants in the Kurdish province of Dohuk took to the streets, demanding their salaries for the past two months.