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Erbil and Baghdad have reached a deal on federal budget payments, Iraqi Kurdistan’s Prime Minister announced on Tuesday.

Payments to the Kurdistan Regional Government from Iraq's federal authority will be backdated to January 2021, Barzani said – the month that the long-delayed federal budget law for 2021 was supposed to come into effect.

I spoke with PM today as part of our ongoing talks and shared commitment to bring certainty to the Erbil-Baghdad relationship.

I’m pleased to announce we’ve reached a deal that will see federal budgetary payments restored to the KRI and backdated to Jan 2021.

— Masrour Barzani پابەندین# (@masrour_barzani)

Iraq’s Council of Ministers voted to approve the bill, which gave 12.67 percent of the federal budget to Iraqi Kurdistan, in December 2020, but disputes over how much oil and customs revenues Iraqi Kurdistan would have to hand over to the central government meant it took four months to move through parliament. The law was finally approved on 31 March.

However, Baghdad will send Erbil 200 billion dinars ($137 million) a month, the Minister of State for Negotiation Affairs with the Federal Government Khalid Shwani,  on Tuesday.

The months of delays have added to the of Iraq and Iraqi Kurdistan, both already struggling to cope with last year's dinar devaluation and the global oil price collapse. 

Erbil has blamed the budget law delays on Baghdad and said it could not pay government employees their salaries on time or in full. Civil sector workers took to the streets in protest across Iraqi Kurdistan for much of 2020.

A Kurdish committee member dismissed the concern expressed by Iraq's Commission for Integrity that the back payments would violate an article of the budget law.

"There is no legal issue in the Iraqi budget for 2021," Rebwar Karim Mahmood, a Kurdish member of the commission on Tuesday.