Iraq's 2027 Budget Talks Intensify Over Kurdistan's Allocation and Oil Exports

ERBIL (Kurdistan24) - Iraq's government plans to dedicate a cabinet meeting on Tuesday, Nov. 10, to its proposed 2027 federal budget, as negotiations with the Kurdistan Regional Government (KRG) continue over the Region's share, public-sector salaries and a disputed requirement to export 450,000 barrels of oil per day.

Government spokesperson Haider Aboudi told the Iraqi News Agency (INA) on Saturday, Nov. 7, that Prime Minister Ali al-Zaidi had directed ministers to concentrate on the budget at the rescheduled session. The government intends to approve a draft for submission to parliament, but disagreements over provisions affecting the Kurdistan Region remain unresolved.

The announcement came after a special cabinet meeting planned for Saturday was postponed. An Iraqi Council of Ministers source told Kurdistan24 that differences among political parties over the draft had prevented the meeting from taking place.

The new date gives federal officials and Kurdish representatives several more days to negotiate before ministers consider the bill.

The talks concern more than a disagreement over percentages.

They encompass the financing of salaries and services, control and delivery of oil revenues, customs administration and how the Region's share should be calculated within Iraq's overall spending plan.

Baghdad's Proposal and Erbil's Objections

According to information obtained by Kurdistan24, the federal government has proposed assigning the Kurdistan Region 12.67% of the 2027 budget while requiring it to export 450,000 barrels of oil daily.

The KRG is seeking a share of about 14% and says the proposed export volume cannot be met.

Neither side has announced an agreement on those terms. The export figure is a proposed federal condition, not an undertaking accepted by the KRG, and the allocation percentages reflect competing positions rather than a finalized budget law.

Kurdish officials have argued that the share should be calculated using Iraq's population figures.

Their position cites the latest census, which they say establishes the Region's share of the population at 14.14%. That figure underpins Erbil's demand for an allocation higher than the 12.67% proposed by Baghdad.

The dispute is significant because a percentage written into a budget does not necessarily establish how much funding will ultimately reach the KRG.

The basis for calculating the share, deductions and the treatment of different expenditure categories are all consequential to the actual resources available for government obligations.

The difference between the two proposals also carries implications for how each side presents the agreement to its institutions and the public.

Kurdish negotiators are arguing for a population-based entitlement, while the draft described by Kurdistan24 retains the lower federal figure. So far, no revised formula accepted by both governments has been announced.

Kurdistan24 has learned that the current draft provides for approximately 13 trillion Iraqi dinars for the Kurdistan Region.

Information obtained by the outlet indicates that this sum would not meet the Region's salary bill and other expenditures. 

A Delegation Expected in Baghdad

Sherwan Dubardani, a member of the Kurdistan Democratic Party (KDP) faction in Iraq's parliament, told Kurdistan24 that a senior KRG delegation is scheduled to visit Baghdad on Sunday, Nov. 8, to pursue discussions on the budget and other outstanding financial matters.

KRG Finance Minister Awat Janab Nouri is expected to join the delegation.

Dubardani said the minister is scheduled to meet federal counterparts responsible for oil, finance, and construction and housing, reflecting the range of subjects that remain under discussion.

The lawmaker emphasized that the differences are not confined to salaries.

He identified oil, domestic revenues and the ASYCUDA customs system among the outstanding issues requiring further talks, underscoring how budget allocations are tied to wider questions about the financial relationship between the two governments.

The practical importance of those issues extends beyond the headline budget percentage.

How domestic revenues and oil-related obligations are handled can shape the funds each government expects to collect or transfer.

Dubardani did not provide details of a prospective compromise on customs arrangements or revenues, leaving those questions open ahead of the delegation's visit.

A visit would also provide an opportunity to address the gap between the proposed oil obligation and what KRG negotiators say the Region can deliver. No agreement on the proposed 450,000-barrel daily requirement had been announced as of Saturday.

Separately, KDP lawmakers have been holding talks with federal officials ahead of the cabinet meeting.

On Saturday, the party's parliamentary faction announced that its delegation, led by Shakhawan Abdullah, had met a federal ministerial committee chaired by Deputy Prime Minister Mohammed Tamim.

The committee included the ministers of oil, finance, and construction and housing, as well as the Federal Board of Supreme Audit. The meeting followed earlier discussions between the KDP faction and Prime Minister al-Zaidi, after which the committee was established to examine the draft budget and oil-related provisions.

Participants discussed financial entitlements, salary guarantees and the oil dossier in detail, according to the KDP faction.

At the conclusion, the parties agreed on the importance of achieving political consensus and protecting the rights of all Iraqi citizens. They did not announce a resolution of the disputed figures or obligations.

Earlier in the week, KDP lawmaker Sipan Sherwani also described meetings with senior federal officials focused on salaries and the Region's financial rights.

Speaking to Kurdistan24 correspondent Shivan Jabari in Baghdad, Zuhair Fatlawi of the Ishraqat Kanoon parliamentary bloc identified disagreements over the Kurdistan Region's provisions as the reason for Saturday's postponement.

A 43 Trillion Dinar Budget Gap

The negotiations are taking place against the backdrop of a substantial projected federal deficit. Figures from the draft, first published by Kurdistan24 on Oct. 6, put Iraq's anticipated 2027 revenues at 174 trillion dinars and expenditures at 217 trillion dinars.

That leaves a projected shortfall of 43 trillion dinars.

According to the information obtained by Kurdistan24, the federal government plans to cover the deficit through domestic and foreign borrowing. The figures are budget estimates, not final expenditure authorizations, and remain subject to government and parliamentary consideration.

The size of the projected deficit places the discussion over regional transfers within a wider fiscal debate over how Iraq will finance its commitments.

For Erbil, the central question is whether the final provisions will supply enough money for salaries and operating needs without imposing an oil-export condition it says is beyond its capacity.

The 13 trillion dinars reportedly earmarked for the Region has become a point of concern for that reason. Kurdish officials argue that an allocation must be assessed against the cost of meeting existing commitments, not only against the percentage stated in the draft.

The latest meetings had not produced a publicly announced adjustment to that amount.

Baghdad, meanwhile, has not announced that it is withdrawing either its proposed share or export requirement. The continuing negotiations indicate that the terms of the federal-region financial relationship have yet to be settled for the coming budget year.

Development Priorities and the Route to Parliament

Aboudi said the government's approach to the 2027 budget will link financial allocations to specific intended outcomes.

He also described financial measures intended to support economic development and improve Iraq's ability to manage risks and challenges.

Two strategic initiatives are included among the government's priorities: the Development Road project and the Generations Sovereign Fund.

Aboudi said both would receive significant attention in the budget, although the announcement did not identify the sums allocated to either initiative.

The inclusion of national development priorities does not resolve the questions over the Kurdistan Region's entitlement.

Negotiators must still reach a workable arrangement on the share, salaries and the responsibilities associated with oil and other revenues if the cabinet is to move ahead with a bill acceptable to the competing parties.

Approval by the Council of Ministers would not itself make the 2027 budget law. The draft would then be sent to Iraq's parliament for consideration and a vote, with legislators able to debate its provisions before enactment.

Tuesday's session is therefore an intended step in a longer process, not confirmation that the budget has passed.

With a KRG delegation due in Baghdad and ministerial discussions already underway, the immediate test is whether officials can narrow their differences before the cabinet reconvenes.

Until then, the proposed 12.67% allocation, Erbil's demand for a larger census-based share and the 450,000-barrel oil condition remain the principal unresolved issues shaping Iraq's 2027 budget negotiations.