The Iraqi Parliamentary Finance Committee convened a high-level meeting with the Budget Department to finalize critical fiscal reforms and structural mechanisms for the 2027 state budget.

The Council of Representatives' Finance Committee, chaired by MP Uday Awad Kadhim, held the meeting on Sunday with the Director General of the Budget Department, Milad Ziad Abdul Mawla, and senior IT and budget preparation staff.

The meeting aimed "to discuss the state’s general budget structure, public fund management mechanisms, and reform steps for preparing the 2027 budget," according to the parliament’s Media Department.

Non-Oil Revenue Shift and Strict Budget Estimations 

Kadhim emphasized the importance of maximizing public revenues, enhancing budgetary resources, and reducing reliance on oil as the state's primary revenue source.

He also stressed developing budget preparation mechanisms to ensure accurate revenue and expenditure estimations.

Hybrid 2027 Budget Format and Mandatory Project-Tracking 

Meanwhile, Director General Mawla noted that this experiment has been applied in some governorates, explaining that the 2027 budget will adopt a format based on continuing the line-item budget for appropriation, expenditure, accounting, and oversight purposes, while adding a mandatory annex for planning, measurement, and prioritization.

"Additionally, it will separate the operational budget from the investment budget and obligate spending units to link expenditures, projects, and programs to manageable and traceable schedules," she added.

Spending Caps, Digital Systems, and Fiscal Controls

The officials reviewed the Budget Department's plan to manage public funds, curb expenditures, and comply with cabinet directives to maximize state revenues.

The session also examined fee adjustments, revenue declines, and expenditure ceilings to align project listings with the 2027 performance-budget framework.

To enhance transparency, the Committee discussed launching a digital platform connecting spending units with the Budget Department, automating financial systems, and adopting government e-payments.

Moreover, Finance Committee members raised inquiries regarding the Financial Management Law, budget criteria, project financing, sovereign guarantees, and the impacts of fiscal decisions.

Iraq Fights Fiscal Crisis and Budget Freeze 

Because Iraq completely bypassed passing a formal 2026 budget law due to cabinet delays and shifting oil revenues, the country has been operating solely on this 1/12th rule. 

It allows the Ministry of Finance to keep paying public sector salaries and essential state utilities using carried-over limits, but it completely freezes new public investment projects 

To mitigate severe deficits driven by volatile markets, parliament is preparing draft legislation to address a critical liquidity crisis and collapsing oil exports through public sector downsizing and the sale of state assets. 

Parliamentary Finance Committee stated that the draft legislation serves as a temporary measure to provide the government with the necessary legal framework for domestic and external borrowing. 

Speaking to Channel8 earlier, MP Mansour al-Baiji stated that a pending $2 billion U.S. Treasury loan to Iraq requires parliamentary authorization before any funds can be released.