Iraqi Kurdish economic crisis set to deepen

Significance

The KRG has had difficulty making payments to IOCs owing to a serious shortfall in fiscal revenue in 2014-15, the result of disputes with Baghdad and falling oil prices. Salaries and government payments are deep in arrears, previously booming investment has ground to a halt and banks lack liquidity.

Impacts

• The economic crisis will exacerbate the dispute between the main governing party, the KDP, and its coalition partners.
• An economic revival would be a boost to Turkey, the region's main investor and supplier of imports.
• If exploration resumes, the KRG could be a key contributor to global oil supply growth over the next decade.