Haider al-Abadi told reporters Tuesday that the proposal is not "a punishment" to the Kurds in the wake of controversial independence vote held late September. That vote saw a majority support from the Kurds. Baghdad considers it unconstitutional and illegal.
Al-Abadi says his government is considering the region's population data, the real needs of all Iraq's regions and the poverty level nationwide.
The proposal is still under discussion in the Cabinet. It must be endorsed and sent to parliament for final approval.
Since the 2003 U.S.-led invasion, the Kurdish region has been entitled to 17 percent of the budget based on political agreements.