Iraq drafts record 2027 budget despite deep fiscal crisis and oil export slump
Iraq is debating a draft 2027 federal budget that would be the largest ever, but it assumes revenue far beyond current oil earnings, creating a huge deficit.
Iraq’s draft federal budget for 2027 would set a new historical high at roughly 217.2 trillion dinars, yet it forecasts revenue of only 174.2 trillion dinars, creating a deficit of about 43 trillion dinars. The shortfall is expected to be covered by higher oil prices, increased exports, borrowing and carry-over funds, assumptions that clash with recent fiscal performance after oil exports collapsed from 3.36 million barrels per day to 131,000 barrels per day.
The government has been draining foreign reserves, which fell from about $109 billion to $80.6 billion, and has approached the IMF for a new loan programme. The budget heavily emphasizes salaries, social welfare and debt service, prompting economists to label it a politically driven, expansionary plan that ignores the country’s dire economic reality. Prime Minister Ali Al Zaidi has ordered the conversion of half a million contract workers to permanent status, while the draft also preserves the Kurdistan region’s 12.7% share of spending and sets new oil-marketing obligations for the KRG. The proposal still requires cabinet approval before parliamentary endorsement.
Why it matters
The budget’s unrealistic assumptions risk worsening Iraq’s debt crisis and could affect regional oil markets.
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