At a Glance

• The draft 2027 budget proposes setting the official exchange rate at 150,000 IQD per $100 to eliminate the gap with the parallel market.
• MP Dilan Ghafoor said fixing the dollar rate at this level is projected to inject an additional 20 trillion dinars into national revenues, bringing the total estimated budget to 218 trillion dinars.
• The draft bill benchmarks the budget on an estimated crude oil price of $58 per barrel.
• While public employee salaries are secured in the draft, other KRG demands remain unresolved.

Iraqi Parliamentary Finance Committee member Dilan Ghafoor, quoting Minister of Finance Faleh al-Sari, stated that the value of $100 has been set at 150,000 dinars in the draft 2027 budget, adding that there are numerous unresolved issues regarding the rights of the Kurdistan Region in the draft bill.

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Key Statements and Focus Area

• MP Dilan Ghafoor told Channel8 that according to the decision, the gap between the official exchange rate and the parallel market rate will be eliminated. 
• Ghafoor noted that the committee's meeting with the Finance Minister was dedicated entirely to gathering comprehensive details on the draft budget bill, emphasizing that the dollar exchange rate was discussed as one of the most critical aspects of the budget. 

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Speaking to Channel8, Lawmaker Ghafoor said that if the decision is implemented, both the parallel market rate and the official government rate will align at 150,000 dinars. 

She stressed that fixing the dollar rate at 150,000 dinars will inject an additional 20 trillion dinars into the budget revenue.

Ghafoor also clarified that the approval and vote of the Council of Ministers and Parliament are required; although the Ministry of Finance has thoroughly studied the matter, “it does not mean this is a final decision. Principal agreement, however, is included in the draft.” 

The lawmaker confirmed that the total estimated draft budget will reach 218 trillion dinars. The Next year’s draft budget is estimated at 200 to 240 trillion dinars, with the Kurdistan Region requesting roughly 29 trillion dinars. 

This proposed allocation is intended to cover KRG public employee salaries, job promotions, new hires, and the permanent integration of contract teachers and civil servants. 

Ghafoor highlighted that, thus far, only the salaries of the Kurdistan Region's public employees have been secured in the draft budget, adding that all other demands from the Kurdistan Region remain under discussion, with no guarantees provided yet. 

She underlined that it is critical for the Kurdistan delegation to remain continuously engaged in Baghdad at this stage to resolve outstanding budget issues with the Iraqi government and effectively lobby for its interests.

Regarding the price of oil in the budget, the Finance Minister confirmed that a barrel of oil has been set at $58.

FYI

The proposed currency devaluation comes amid a widening spread between Iraq’s official exchange rate and the parallel market, where street transactions have recently fluctuated between 1,570 and 1,600 dinars per dollar.

This drive to readjust the official peg to 1,500 dinars is fueled by a severe fiscal crisis, highlighted by a massive 26.3 trillion dinar ($20.16 billion) budget deficit in the first seven months of 2026 alone after geopolitical conflicts heavily disrupted seaborne crude exports.

While the Central Bank of Iraq (CBI) has historically resisted shifting its formal baseline from the 1,300 to 1,320 range to protect domestic purchasing power, intense pressure from the Ministry of Finance may force the bank to administer this shift.

If the draft budget passes, the administrative realignment will allow the ministry to convert oil dollars into a higher volume of local currency, though financial experts warn it could cause an immediate spike in consumer inflation and drive parallel market rates past 160,000 dinars per $100.

Concurrently, the draft 2027 general budget law is under evaluation by the Iraqi Cabinet and is slated for official submission to parliament by mid-month. 

The Kurdistan Regional Government is demanding a full 14.14% share of the 2027 federal budget, calculated using recent census data to expand funding beyond public salaries into regional investment and infrastructure projects. 

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