Baghdad – INA
Financial adviser to the Prime Minister, Mudhhir Mohammed Salih, said on Monday that Iraq’s 2027 federal budget is being prepared with a reform-oriented vision aimed at enhancing fiscal sustainability and supporting economic reform, despite delays in its approval.
Salih explained that Iraq’s fiscal policy continues to be administered under the provisions of the Federal Financial Management Law No. 6 of 2019, particularly Article 13, which regulates public spending when the federal budget law has not yet been enacted. Under this provision, the Ministry of Finance is authorized to allocate monthly spending equivalent to one-twelfth of the previous year’s actual current expenditures, excluding non-recurring expenses, to ensure the continuity of government operations.
He noted that this mechanism has enabled the state to meet essential obligations, including salaries, wages, pensions, social protection benefits, and operational expenditures necessary for maintaining public services. The same provision also allows continued financing of ongoing investment projects based on actual completion rates or delivered work, subject to available liquidity and anticipated allocations in the forthcoming budget.
According to Salih, Iraq’s public finances faced exceptional challenges in 2026 due to geopolitical and regional developments that disrupted global energy markets, supply chains, and international trade. These factors directly affected oil revenues, which remain the country’s primary source of public income, increasing pressure on the government’s ability to finance both operational and investment spending.
He stated that these circumstances prompted the government and the Ministry of Finance to prepare the 2027 budget within a broader reform framework designed to preserve fiscal sustainability and macroeconomic stability.
The adviser indicated that the upcoming budget will prioritize improving the efficiency of public resource management, rationalizing operational expenditures, safeguarding social spending for vulnerable groups, and directing resources toward investment projects with strong economic and developmental returns.
Other key priorities include diversifying public revenue sources, reducing dependence on oil income, supporting financial and administrative reform programs, expanding government digitalization efforts, and strengthening the national economy’s resilience against external shocks to ensure medium- and long-term financial stability.
Salih added that these objectives are aligned with Iraq’s national financial strategy, public financial management reform programs, and the goals of Iraq Vision 2035, which seeks to build a diversified and sustainable economy capable of achieving comprehensive growth and development while reinforcing the country’s fiscal resilience in the face of regional and international challenges.