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Tishwash:
Concerns about postponing the 2027 budget
With the parliamentary session nearing its end this month, concerns are mounting about the potential postponement of the 2027 budget bill, particularly after the cabinet meeting scheduled for Saturday was adjourned due to ongoing political disputes.
The most significant sticking points revolve around oil and non-oil revenues, disagreements with the Kurdistan Region, provincial allocations, and the issue of borrowing.
MP Kadhim Atiya explained to Al-Sabah newspaper that the delay stems from the lack of a comprehensive revenue tally, warning of potential shortages in provincial allocations.
Regarding the oil sector, MP Jamal Kojar noted the Kurdistan Region’s apology for failing to deliver 445,000 barrels per day due to a drop in production to 250,000 barrels per day, while MP Ghufran al-Shammari emphasized the importance of the region’s commitment to delivering non-oil revenues.
For his part, MP Bassem Al-Gharabi warned against expanding borrowing without study, while MP Ali Al-Fayyad expressed his confidence in overcoming the differences and distributing resources fairly to ensure the approval of the budget and to quell any potential crisis. (LINK)
The oil and gas law has been stalled for two decades… Will the Baghdad-Erbil understandings end the era of temporary settlements?
The project remains stalled within the government amid disagreements over field management, contracts, and exports.
Despite the passage of nearly two decades since the introduction of the federal oil and gas law, the legislation that is supposed to regulate the management of oil wealth in Iraq remains stuck in the government drawers, amid political and technical disputes between Baghdad and Erbil regarding the management of the fields, contracting powers, production, export and the distribution of revenues.
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While recent understandings between the federal government and the Kurdistan Region have revived hopes for the project’s revival, members of parliament confirm that its final draft has not yet reached parliament. Experts believe that overcoming constitutional disputes is a prerequisite for ending the temporary arrangements governing the oil relationship between the two sides.
The oil and gas law, which has been stalled since the adoption of the Iraqi constitution in 2005, is one of the most important pieces of legislation related to shaping the country’s oil policy and regulating the mechanisms for extracting resources and distributing revenues between the federal government and the producing regions and governorates. However, differing constitutional interpretations regarding the centralization of oil decision-making and the powers to contract with foreign companies have prevented its passage throughout successive legislative sessions.
Amid repeated parliamentary demands to end the legislative vacuum and establish clear rules for managing the oil sector, questions are resurfacing about the fate of the government’s version of the project and the reasons for the delay in submitting it to the House of Representatives, especially given the ongoing disputes over the management of oil fields, revenues, and contracts signed with foreign companies.
In this context, Qaisar al-Jurani, a member of the Parliamentary Oil, Gas, and Natural Resources Committee, confirmed that “the draft federal oil and gas law remains in the government’s files and has not yet been sent to Parliament in its final form, despite its importance in regulating and managing Iraq’s oil wealth.”
Speaking to Al-Mada in an exclusive interview, al-Jurani said, “Enacting this law has become a national necessity, particularly to regulate the oil relationship between the federal government and the Kurdistan Region, and to define the powers of managing oil fields, as well as the mechanisms for production, export, contracts, and revenues, in accordance with the constitution and in a manner that preserves the rights of all producing governorates.”
He added that “the continued delay in enacting the law leaves the oil-related issues unresolved without clear legislative solutions,” calling on the government to “resolve the disputes and send the draft law to Parliament so that it can discuss it, make the necessary amendments, and vote on its enactment.”
These parliamentary stances reveal the continued stagnation of the project within the executive branch, at a time when political disagreements are intertwined with technical matters related to managing the sector, in addition to the issue being linked to financial entitlements and the general budget, and the resulting need for renewed understandings between Baghdad and Erbil.
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In this context, Haider al-Sheikh, a researcher in economic and oil affairs, explained in an exclusive interview with Al-Mada that “the oil and gas law is one of the most important laws on the agenda of the Council of Representatives, and it was supposed to have been voted on by the Council since its first session. However, the accumulation of political disputes and technical problems prevented this from happening over the past years.”
Al-Sheikh clarified that “the importance of the law lies in its regulation of the administrative work of oil companies and its granting of broad powers to the federal government to oversee the operations of companies working in the fields of oil extraction and export, thus ensuring the unity of the country’s oil policy.”
He pointed out that “the core of the current dispute between the federal government and the Kurdistan Regional Government revolves around the authority to manage the oil fields, as well as the mechanisms for signing and renewing contracts with foreign companies investing in the region.”
The researcher elaborates on the nature of these obstacles, explaining that “the main disagreements surrounding the draft law fall into two parallel tracks: the first is political, and the second is purely technical. These relate directly to determining which entity will actually manage the oil fields in the Kurdistan Region and which entity will be authorized to export the extracted oil to foreign markets.”
Sheikh anticipates that “the period following the approval of the federal budget law will witness a serious governmental focus on the oil and gas law, working to make the necessary amendments to the previous version, in preparation for sending the revised draft law to the Council of Representatives for a vote.”
The importance of resolving these legislative disputes is amplified by the Iraqi economy’s heavy reliance on the oil sector. Iraq possesses approximately 145 billion barrels of proven oil reserves, ranking fifth globally, while oil revenues constitute about 90% of the state’s total revenues. This makes regulating, developing, and attracting investment to the sector directly linked to the country’s financial and economic stability.
Regional crises, particularly the Strait of Hormuz crisis, have exposed the fragility of Iraq’s near-total reliance on its southern maritime outlets for crude oil exports. Iraqi oil exports plummeted to approximately 2.34 million barrels per day last August, compared to over 3.3 million barrels per day before the war. This has prompted Baghdad to intensify its search for alternative and safer export routes through Turkey, Syria, and Jordan.
These challenges coincide with political efforts to resolve outstanding issues between the federal government and the Kurdistan Region. Last Monday, Kurdistan Regional Government Prime Minister Masrour Barzani announced, following what he described as “excellent” talks in Baghdad with Prime Minister Ali Mohseni, that a mutual understanding had been reached to resolve financial matters and approve a unified and comprehensive budget for 2027.
Barzani indicated that the meetings addressed all outstanding issues, primarily the management of oil fields, revenues, and the security of energy facilities, as well as advancing the oil and gas law—a move that has brought the issue back to the forefront of political discussions after years of stagnation.
The State Administration Coalition discussed an updated version of the draft law last September, in preparation for submitting it to the Council of Representatives. This coincided with ongoing technical discussions between Baghdad and Erbil to reach a consensus formula regulating powers, contracts, production, exports, and revenue distribution, and to provide a more stable environment for attracting investments and developing the energy sector.
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In contrast to calls for unifying oil policy management, the Kurdistan Region insists that the new draft law must respect the nature of the federal system and the constitutional powers granted to the region, particularly regarding the management of oil fields and contracts.
In this regard, the region’s former energy advisor, Dilshad Shaaban, had previously stated in a press release that “the region’s position is based on the necessity for the new draft to be grounded in the federal system and the powers stipulated by the constitution, and that the management of oil wealth should not become a centralized administration that concentrates decision-making solely in the hands of the federal government.”
Shaaban explained that “Erbil is pushing for legislation that clearly and precisely defines the powers of the federal government, the Kurdistan Region, and the oil-producing governorates, particularly regarding the management and development of oil fields and contracts with foreign companies. This includes regulating production, export, and revenue within an agreed-upon federal framework, rather than addressing these sensitive issues through temporary agreements that only reignite disputes between Baghdad and Erbil with every financial obligation.”
The former advisor pointed out that “one of the key points for the Kurdistan Region concerns the interpretation of constitutional provisions related to the management of existing and newly discovered oil fields, as well as finding a sound legal framework for current oil contracts that preserves the legal and financial obligations and rights associated with them.”
The issue of existing oil contracts is among the most prominent files requiring resolution through consensus between the two sides, given the differing positions on the constitutional powers to manage the fields and the limits of the federal and regional governments’ authority in dealing with foreign companies.
For his part, energy expert and head of the Sustainable Energy Organization, Mohammed Amin Hawramani, stated in a previous press release that “the Kurdistan Region, based on what it considered its constitutional right, enacted its own oil and gas law within the regional parliament, before the Federal Constitutional Court ruled it null and void due to the absence of a federal oil and gas law that should have been passed nearly two decades ago.”
Hawramani explains that “the Iraqi constitution clearly stipulates the necessity of enacting a federal law to regulate the management of oil wealth throughout the country. However, accumulated political disputes kept the issue unresolved for more than twenty years, creating a legislative vacuum that resulted in widespread economic repercussions, the losses of which were borne by both Baghdad and Erbil.”
The energy expert recalls the consequences of the region’s oil exports being halted for more than two years due to a complaint filed by the Iraqi Ministry of Oil, and the significant financial losses that ensued, before exports resumed later under a tripartite agreement between Baghdad, the region, and the foreign companies operating there.
Horamani attributes the continued delay in enacting the law to reasons beyond technicalities, arguing that it reflects “a lack of genuine desire among some political parties to allow the region to manage its own production or export operations, despite the fact that marketing and sales are now conducted entirely through the Iraqi State Oil Marketing Company (SOMO).”
He adds that “international and American pressure was a decisive factor in pushing Baghdad to accept the resumption of oil exports from the region, especially given the decline in global oil prices over the past three years to below the $70 per barrel price stipulated in the budget law. This has made the federal government more reliant on the region’s revenues to fund salaries and operational expenses.”
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The head of the Sustainable Energy Organization points out that “Iraq is practically obligated to continue exporting via the Turkish Ceyhan pipeline, not only to secure the flow of revenues but also to maintain a delicate oil-water exchange with Ankara, making the energy sector an integral part of a broader network of regional interests.”
Between calls to unify the management of the oil sector and demands to preserve the constitutional powers of the region, the draft federal oil and gas law remains pending, awaiting a political and technical consensus that will end the disputes that have prevented its enactment for nearly two decades.
With continued reliance on interim agreements to address oil and financial matters, the absence of a stable legislative framework continues to negatively impact the long-term foreign investment environment and plans for domestic gas investment and development. Meanwhile, the economic relationship between Baghdad and Erbil remains contingent on settlements that shift with changes in government, political circumstances, and financial obligations.
The recent agreements regarding the 2027 budget, field management, and revenues present both parties with a new test of their ability to translate political consensus into permanent legislation governing the management of oil wealth. This legislation would definitively address jurisdictions, contracts, exports, and revenue distribution, after years of managing these issues through temporary agreements that failed to resolve the underlying disputes. (LINK)
Iraq’s cabinet delays vote on 2027 budget that would tax internet, travel and restaurants
Iraq’s Council of Ministers has postponed a vote on the draft 2027 federal budget, a spending plan that would raise money from new taxes on internet services, foreign travel, restaurants and private clinics as the government tries to narrow a deficit of about 43 trillion dinars (roughly $32.8 billion).
An extraordinary cabinet session called for Saturday to approve the draft has been put off with no new date, a source in the council told Kurdistan24. The source said a joint committee of Baghdad and Erbil officials had not finished rewriting the bill’s clauses, and that technical talks on the Kurdistan Region’s share of the budget had still not produced a final deal.
The draft was published on Oct. 6. It projects public spending of about 217 trillion dinars, the largest in Iraq’s history, against non-oil revenue of about 29.5 trillion dinars. The rest of the gap would again fall on oil sales, which still fund most of the state’s salaries and services.
To lift non-oil income, the bill proposes a 7% sales tax on telecommunications and internet services, a 25,000-dinar fee on every foreign travel ticket and new charges at airports and border crossings. Restaurants, hotels, private medical services, digital advertising and some other commercial activities would also be taxed.
Jamal Kocher, a member of parliament’s finance committee, said the state should collect more of the customs and tax revenue it is already owed rather than load new costs onto citizens as living costs rise. He said some of that money never reaches the treasury because of c********n and weak oversight.
Traders have also objected. Rashid Saadi, spokesman for the Baghdad Chamber of Commerce, said importers already pay a 3% tax deposit before receiving goods and customs duties of up to 30% or 40% on some items. He said wider fees could push merchants to raise prices or cut imports, hurting small and medium-sized businesses.
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Economist Salah al-Obeidi said the non-oil revenue target is close to double the 2025 figure and is unlikely to be met through new taxes alone. Higher charges on travel, communications and services could cut demand and limit the money raised, he said, while registered firms would carry the burden and informal businesses would stay outside the tax net.
Iraq’s governments have pledged for years to reduce the state’s dependence on oil. The delay leaves ministries, provinces and the Kurdistan Region without an approved 2027 spending plan less than seven weeks before the year begins. (LINK)
Spanning between 2027 and 2029… Details revealed about a potential agreement between the Iraqi government and the International Monetary Fund
Iraqi economic expert and analyst, Ziad al-Hashemi, revealed that the Iraqi government has made significant progress in its ongoing negotiations with the International Monetary Fund, with the aim of reaching an agreement that would provide the country with emergency financial support, conditional on a package of urgent financial and monetary reforms.
Al-Hashemi explained, via a post on his account on the “X” platform, that the rounds of negotiations moved from a general description of the economic crises to setting a medium-term reform framework that extends for three years, for the period from 2027 to 2029, stressing that Iraq is in dire need of such a program more than ever before.
According to Al-Hashemi’s economic analysis, the IMF program imposes a focus on four main tracks that constitute the cornerstone of any genuine rescue plan: strengthening anti-c********n mechanisms; reforming the public finance system; correcting monetary policy; and restructuring and developing the banking sector, all amidst financial ambiguity and official silence.
Despite the progress made in the negotiations, Al-Hashemi pointed out that the details regarding the total value of the financial loan and the areas of government spending are still unknown, given the continued absence of any clarifications or official statements issued by the Ministry of Finance in this regard.
The economist concluded his analysis by emphasizing that the strategic importance of the anticipated agreement lies at the heart of the reform plan and its viability, transcending the size of the loan itself. However, he simultaneously expressed skepticism about the executive branch’s ability to implement these conditions in practice, attributing this to the fact that proceeding with structural reform will inevitably clash with the interests of influential political forces whose gains are tied to the perpetuation of financial and monetary imbalances without fundamental reform. (LINK)
Source: Dinar Recaps
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