Iraq rebuilds its budget from scratch for 2027

Baghdad is now drafting its FY 2027 federal budget, after essentially giving up on pushing through a budget for 2026, Finance Minister Faleh Al Sari told parliament’s finance committee on Tuesday. A cocktail of factors — a bruising government formation process under Ali Al Zaidi, regional disruption gutting oil revenue, and the calendar simply running out on 2026 — made it impossible for Iraq to enact a budget for the current fiscal year. The draft budget is heading to the Ministerial Council for Economic Affairs, then Cabinet, then parliament.

A redesign: The Finance Ministry is moving Iraq off its decades-old line-item budget toward a program-and-performance model, coordinated with the World Bank and meant to turn the budget into the country’s main development tool. It’ll roll out in a handful of governorates first, then go national.

The 2027 draft budget is expected to lean hard on non-oil revenue as Iraq’s crude exports have cratered to under 10 mn bbl / month from 100 mn bbl prior to the regional turmoil. Baghdad will focus on activating an automated customs system, standing up a development fund and an energy fund, and tightening collection, all while protecting public salaries and social security.