At a Glance

• Iraqi PM announced the draft will soon head to parliament.
• Ongoing fiscal reforms aim to secure 17.8 trillion dinars within one year.
• The 2027 economic roadmap focuses heavily on electricity and solar energy transition.

Iraqi Prime Minister Ali Faleh al-Zaidi stated that the government will soon submit the draft budget to parliament, emphasizing that while Iraq faces a difficult phase, multiple solutions are in place to address its economic challenges.

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Key Statements and Focus Areas

• Ali Faleh al-Zaidi said a reform plan is underway to address the country’s economic challenges.
• Al-Zaidi noted that within one year, Iraq will achieve financial savings of 17.8 trillion dinars.

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Speaking at the 8th Baghdad Dialogue Conference on Friday, the Iraqi Prime Minister stated the upcoming budget will serve as a strategic roadmap for the future of the economy.

Al-Zaidi emphasized that next year's budget will focus on the electricity sector and the utilization of solar energy.

Regarding the economic pressures facing Iraq, he asserted that the closure of the Strait of Hormuz is a major challenge.

He stressed that Iraqi authorities are working to activate border crossings and find comprehensive solutions to existing economic obstacles.

The Prime Minister highlighted that the government possesses multiple options for the financial issues facing the country, adding that authorities have secured salaries and found alternative routes for oil exports.

FYI

Iraq is undergoing a major fiscal restructuring as the federal government prepares to submit the 2027 draft budget to parliament. Following a 2026 budget freeze that forced the country to operate under a restrictive 1/12th expenditure rule. 

To reduce its near-total reliance on volatile oil markets, the parliamentary finance committee is introducing a hybrid budget format that prioritizes performance tracking and maximizes non-oil revenues.

Finance Minister Faleh Sari visited the Budget Department earlier to ensure strict adherence to completion schedules and oversee the implementation of a performance budgeting framework.

The government is also aggressively working to activate and automate border crossings, modernize financial oversight with digital e-payment systems, and secure alternative land and maritime routes for oil exports to protect national income. 

Despite severe macro liquidity challenges and regional supply line risks like the potential closure of the Strait of Hormuz, officials have fully secured public sector salaries for the upcoming fiscal year.

Meanwhile, The Kurdistan Regional Government officially finalized and submitted its comprehensive 2027 federal budget proposal to Baghdad yesterday, incorporating financial entitlements, civil service promotions, and public salaries.

The KRG urged federal entities to approach the Region's budget share with shared responsibility and a firm commitment to protecting constitutional rights.

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