The 2027 budget is at the mercy of fluctuations… Borrowing and grants are alternatives to bridge the funding gap.
In a move revealing a strategic shift in the management of the country’s finances, the outlines of a new phase are beginning to take shape within the corridors of economic decision-making in Iraq. This phase is based on rearranging funding priorities and bridging financial gaps through alternative mechanisms. The governmental and legislative compass is now directly pointing towards adopting a law on internal and external borrowing, alongside activating the grants and donations portfolio, as key tools for managing current obligations.
This financial shift is inseparable from a broader and more forward-looking movement; behind-the-scenes efforts are accelerating to prepare a draft budget for 2027 well in advance. These intensive moves aim to put an end to haphazard spending policies and define a clear structural path for public spending, while securing sustainable funding sources capable of withstanding the fluctuations of global markets, thus ensuring the formulation of a clear financial roadmap for the coming years.
In this context, economic expert Dr. Safwan Qusay explained the nature and form of next year’s budget in the event of continued tension and escalation in the region due to the American-led war against Iran.
Qusay told Al-Maalomah that “the 2026 budget will be replaced by a law governing internal and external borrowing, grants, and donations, while efforts are underway to prepare the 2027 budget with the aim of establishing a clear path for public spending and funding sources.”
He added that “there are multiple assumptions regarding next year’s budget, with everyone hoping that the existing disputes and tensions in the region related to the Strait of Hormuz will be resolved before October 15th, given that Iraq relies on oil revenues collected from its southern ports for 90 percent of its income.”
He explained that “if the tensions persist and the problem remains unresolved, Iraq will move towards spending governed by permanent laws, with the necessity of bolstering the revenues of government units so they can finance themselves independently of the Ministry of Finance.”
For his part, economist Abdul Rahman al-Mashhadani asserted that the government will be unable to finalize and implement the 2027 budget given the ongoing regional tensions, the US aggression against Iran, and the continued closure of the Strait of Hormuz. He explained that the plans and programs developed by the Ministry of Finance will become mere “ink on paper” without sufficient financial resources.
Al-Mashhadani told the Al-Maalomah news agency, “The government has set an estimated price of $60 to $70 per barrel of oil for next year, a figure that is difficult to rely on given the war, low export rates, and the fact that oil is being sold at the port.”
He added, “The initial estimates for the total budget amount to 150 trillion dinars, of which 135 trillion will go to the operational budget (salaries and daily expenses), and a meager 15 trillion dinars to the investment budget, thus deepening the financial deficit to dangerous levels.”
Al-Mashhadani explained that “these challenges and others will be the primary obstacle to finalizing the 2027 budget.” He also pointed out that “the crisis coincides with a frightening decline in the reserves of the Central Bank of Iraq as a result of its continued sale of foreign currency to the private sector to finance imports, without any corresponding compensatory dollar inflows.” He revealed that “what has recently reached the Central Bank has not exceeded one billion dollars.” Financialmarket updates
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