Baghdad: An initial deal between Iraq`s autonomous Kurdish region and Baghdad aimed at resolving long-standing budget and oil disputes is "a very important first step," the United Nations said on Friday.
Baghdad has long opposed the three-province region`s independent export of oil, while Kurdish leaders have criticised Baghdad for withholding budget payments to the region.
In a first move to end the disputes, the two sides agreed Thursday for Baghdad to pay $500 million to Kurdistan in exchange for the transfer of 150,000 barrels of oil per day to the federal government, the Kurdish region`s government said.
"I welcome the agreement... on resolving the budget dispute," UN Iraq envoy Nickolay Mladenov said in a statement.
"This agreement will allow public sector employees in the governorates of Arbil, Dohuk and Sulaimaniyah to begin receiving their salaries. It will also allow the Kurdistan Regional Government to resume its contribution to the federal budget at a time of national crisis," he said.
The deal was reached at a meeting in the Kurdish capital Arbil between Iraqi Oil Minister Adel Abdul Mahdi, Kurdish regional premier Nechirvan Barzani and his deputy, Qubad Talabani, the Kurdish government statement said.
"Nechirvan Barzani will then head a delegation due to arrive in Baghdad in the coming days to reach a comprehensive, fair and constitutional solution to all outstanding differences between the federal government and the KRG," it added.
The initial deal is one of the most significant achievements of the new Iraqi government of Prime Minister Haidar al-Abadi.
The budget dispute has lasted almost a year and had led to a sharp deterioration of relations between the federal government and the Kurdish region.
A resolution of the budget feud is seen as an essential step in improving cooperation at a time when both are battling the Islamic State jihadist group, which has overrun large parts of Iraq since June.