Iraqi Prime Minister Haider al-Abadi urged Kurdistan on Thursday to drop any plans for independence, criticising a proposed statehood referendum and warning the autonomous region would not prosper on its own.

Abadi also highlighted the economic crisis Iraq faces, saying that oil revenues had fallen by 85 percent compared to two years before -- a major challenge made worse by the country's costly war against the Islamic State (IS) jihadist group.

"The Kurdistan region will not develop without Iraq, and Iraq must be united in all its components," Abadi said following talks in Berlin with German Chancellor Angela Merkel.

"Kurdistan is part of Iraq and I hope it will remain so," he said.

Massud Barzani, de facto president of Iraq's Kurdistan region, declared in early February that the "time has come" for the country's Kurds to hold a referendum on statehood.

But the region's economic problems effectively rule out a viable Iraqi Kurdish state for now.

Abadi criticised Barzani's call, saying that holding a "referendum without result" could be seen as "belittling the common people."

Kurdistan announced earlier this month that state employees would be paid only part of their salaries and that months of unpaid wages from last year would be considered loans to the government until further notice.

The measures have sparked widespread anger among regional government employees, some of whom have protested or gone on strike.

Iraqi Kurdistan has been independently exporting crude via Turkey since a deal with Baghdad on oil and revenue sharing collapsed last year, a move the federal government considers illegal.

Abadi said Kurdistan is exporting over 600,000 barrels of oil per day, accounting for 15 percent of all Iraqi output.

- Oil revenues plunge -

Given that, "I do not understand why the salaries of the peshmerga are not being paid," Abadi said, referring to the autonomous region's security forces.

While the peshmerga are officially exempt from the salary withholding scheme, they too have been hit by unpaid wages, raising potential problems for operations to retake IS's Iraqi hub Mosul, in which Kurdish forces will take part.

Underlining the impact of sinking crude prices on Iraq's economy, Abadi said oil revenues have plunged to just 15 percent of their level two years ago, as he urged the international community to help shore up his country's battered economy.

"Iraqi oil revenues have fallen to just 15 percent of the revenues we had two years ago. This is a major decline and we therefore have great difficulties," he said.

It was unclear which months or other time periods Abadi was comparing, but Iraq made $7.07 billion from oil sales in January 2014 and $2.26 billion last month -- a decline of about 68 percent.

Abadi urged the world community to not only help Baghdad in its battle against IS, but also to support the country so it can provide essential services to its citizens.

World oil prices have dived by 70 percent since June 2014, due mainly to oversupply and weakening global demand.

Announcing a credit line worth 500 million euros ($560 million), Merkel said what Iraq needs is "an economic recovery (through) infrastructure projects, above all in cities that have been liberated from the Islamic State organisation."

The German funds are aimed at helping Iraq "rebuild their infrastructure, as well as give people hope for the future, so that they can avoid having to leave their country," she said.