The fight to drive back Daesh has been an added drain on the Baghdad budget.
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Iraqi Kurdistan's cash-strapped government has seized billions of dollars in deposits at two branches of Iraq's central bank since 2014, bankers said, calling into question the region's image as a business-friendly paradise in the Middle East.Though initially envisioned as a temporary measure, the KRG Finance Ministry's practice of tapping funds that banks had deposited in their current accounts at local branches of Iraq's central bank continued as Kurdistan's economy, which boomed after the 2003 U.S.-led invasion of Iraq, deteriorated.Bankers and KRG officials said the regional government first tapped into banks' deposits at local central bank branches in 2014 after then-Prime Minister Nouri al-Maliki cut Kurdistan's share of the federal budget – its main source of income – in a dispute over the region's independent oil sales to Turkey.That move led to freezing around two dozen banks' current accounts at central bank branches in Kurdistan, bankers told Reuters. Talabani confirmed banks operating in the region had problems accessing their funds.Bankers said the share of seven Lebanese banks' deposits totaled nearly $100 million.Reuters was not able to contact all the banks operating in Kurdistan.Kurdistan's 2014 budget deficit was almost 8 trillion Iraqi dinars ($7.23 billion) and could reach 3 trillion dinars this year, he said.
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