Iraq Shifts Focus to 2027 Budget Planning as Current Year Funding Falls Short

BAGHDAD, Iraq — The Iraqi government has begun working on its 2027 general budget, according to a government source. The source said preparing and approving a separate budget for the current fiscal year has become extremely difficult because more than half of 2026 has already passed, and the remaining time is insufficient to draft and legislate a new budget for this year. The shift toward the 2027 budget comes as Iraq faces mounting economic and fiscal challenges driven by rapid regional developments affecting energy markets and international trade. The closure of the Strait of Hormuz in the Persian Gulf has halted oil exports, placing additional pressure on government revenues and financing capacity. Officials said the government is preparing realistic fiscal estimates for the next budget cycle to secure essential state obligations, including salaries, public services and vital infrastructure projects. Iraq relies heavily on oil revenues, which account for the bulk of budget resources, leaving the country particularly exposed to market disruptions and geopolitical tensions.