ERBIL, Iraq (Reuters) - The deputy prime minister of Iraqi Kurdistan said a dispute with Baghdad over oil sales could easily be resolved if the federal government agreed to cover the region's bloated public payroll, including the salaries of its armed forces.
Hit hard by the global slump in oil prices, the Kurdistan Regional Government (KRG) can no longer afford its own payroll, costing 875 billion Iraqi dinars ($800 million) per month. Officials have warned the region faces an economic collapse.
"If Baghdad pays the full salaries of people who receive salaries from the government in the Kurdistan region, including the peshmerga, we can easily and naturally agree with it," said Qubad Talabani on his official Facebook page.
The comments came after Iraqi Prime Minister Haider al-Abadi said Baghdad was prepared to pay the salaries of government employees in Kurdistan if the autonomous region stopped selling oil independently.
The Kurds ramped up independent oil sales through their own pipeline to Turkey after Baghdad slashed funding to the region in early 2014.
The region's Ministry of Natural Resources said earlier on Tuesday it had generated more revenues in the second half of 2015 by selling oil independently than it had received in export revenue from Baghdad in the first half of the year.
From Jan. 1 to June 23, the Kurds received $1.99 billion in export revenue from the federal government after an agreement with Baghdad stipulated the region's budget share would be reinstated in return for 550,000 barrels of oil per day (bpd).
That arrangement broke down in June. From then until Dec. 31, the KRG achieved revenues of $3.95 billion through independent exports via pipeline to Turkey, even though prices had dropped to $47 per barrel from $60 between the two periods.
(Writing by Isabel Coles; editing by Katharine Houreld)