At a Glance

• Iraq's Ministry of Finance forwarded the finalized 2027 Federal Budget draft to the Ministerial Council for Economy following extensive provincial and regional consultations.
• The draft introduces program-and-performance budgeting via pilot projects in the electricity sector.
• The draft prioritizes non-oil revenues and fiscal discipline as it heads to the Cabinet and Parliament ahead of a mid-October deadline.

The Iraqi Ministry of Finance has officially forwarded the finalized 2027 Federal General Budget draft to the Ministerial Council for Economy, marking a major milestone toward legislative approval after extensive consultations with provincial representatives and the Kurdistan Region.

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Key Statements and Focus Area

• The Ministry of Finance stated it has “officially referred the 2027 Federal General Budget draft to the Ministerial Council for Economy following the completion of its preparation stages.”
• “The Ministerial Council for Economy is scheduled to review the draft budget to complete discussions before officially raising it to the Cabinet in accordance with approved protocols,” the ministry noted.

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The Ministry of Finance announced on Sunday that the budget draft was completed following continuous working sessions by the Supreme Budget Preparation Committee.

Supervised by Finance Minister Faleh al-Sari, these sessions hosted representatives from federal ministries, the Kurdistan Region, and Iraqi provinces, alongside domestic and international financial experts.

Al-Sari stressed that the ministry has “fulfilled its commitments by completing the budget draft within the designated timelines.”

He explained that the 2027 draft budget gradually implements a program-and-performance methodology across the electricity sector, alongside pilot projects in the Diwaniyah and Salah al-Din provinces.

“This approach aims to link financial allocations directly to specific objectives and outcomes while measuring the true impact of public spending, serving as a baseline before expanding the methodology to all state institutions,” the statement emphasized.

The minister further highlighted that the draft budget aligns closely with the priorities of the government program.

The minister added that the draft budget factors in current economic fluctuations and vital societal needs within available resources, while placing a primary focus on "boosting non-oil revenues and solidifying fiscal discipline."

FYI

The budget drafting process formally commenced earlier this year under the direction of Iraq's Supreme Budget Preparation Committee and Finance Minister Faleh al-Sari. 

Concurrently, the Kurdistan Regional Government launched intensive internal technical preparations to ensure its financial allocations were solidified before the final draft text reached Baghdad. 

Subsequent high-level negotiation rounds took place between Erbil and Baghdad, culminating in a mutual understanding regarding the Kurdistan Region’s structural inclusion in the 2027 fiscal plan.

During these sessions, the KRG firmly demanded a 14.14% national budget share based on updated census data, explicitly rejecting a federal proposal to cap their allocation at 12.67%. 

Erbil's negotiating team also demanded the absolute removal of the restrictive "actual expenditure" clause, which historically allowed the federal government to freeze public sector payrolls. Furthermore, the KRG insisted on sovereign funding guarantees for the Ministry of Peshmerga on an equal footing with the Iraqi Ministry of Defence, alongside regularizing contract workers. 

In response, federal authorities under Prime Minister Ali al-Zaidi expressed a legislative willingness to address these constitutional rights.

With the draft now moving to the Ministerial Council for Economy, both sides are working against a tight mid-October deadline to ensure smooth ratification in the Council of Representatives.

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