Iraq’s government has put forward a draft budget for 2027 that assumes an oil price of $58 per barrel and projects total public spending of 217 trillion Iraqi dinars (approximately $166 billion), according to lawmakers familiar with the proposal. The draft budget anticipates a fiscal deficit exceeding 40 trillion dinars.

The plan includes an estimate of crude oil exports at about 4 million barrels per day, a figure that encompasses shipments from the Kurdistan region, four members of the parliamentary finance committee indicated. Oil revenues remain the principal source of government income, underscoring Iraq’s heavy reliance on the energy sector to fund its public expenditures.

In addition to revenue forecasts, the government is considering an adjustment in the Iraqi dinar’s exchange rate against the U.S. dollar, potentially revising it to a range between 1,400 and 1,500 dinars per dollar—a significant shift from the current rate near 1,300 dinars per dollar. Such a move would aim to stabilize the national currency amid economic pressures stemming from external developments.

The ongoing conflict between Iran and other regional actors has disrupted traditional shipping routes, specifically through the Strait of Hormuz, which is vital for exporting Gulf crude oil. This disruption has compelled Iraq to explore alternative transportation routes for its oil exports to mitigate supply chain risks and maintain revenue flows.

The proposed budget and exchange rate adjustments reflect the government’s efforts to navigate a complex geopolitical environment while managing economic challenges, including the need to balance expenditures with fluctuating oil revenues amid regional instability. The draft is expected to undergo parliamentary review before final approval.