Iraq’s cabinet has approved an allocation of $500m from the budget to resolve a dispute with Kuwait over the debts of Iraqi Airways.

Government spokesman, Ali al-Dabbagh announced the cabinet’s approval, Bloomberg reports.

The cabinet asked parliament to approve the allocation of $300m from the 2012 budget and another $200m the following year, Al-Dabbagh said.

State-run Kuwait Airways Corporation (KAC) is seeking $1.2bn in compensation for 10 aircraft taken during the Iraqi invasion of Kuwait in 1990.