Salih, 65, was president of Iraq from 2018 to 2022. He will replace Filippo Grandi, who is leaving at the end of December after 10 years as the UN refugees chief.
A moderate and veteran Kurdish politician, Salih's long political career has included several senior positions in the Iraqi government and in the country's autonomous Kurdistan region after the 2003 US-led invasion that toppled longtime ruler Saddam Hussein.
A letter from UN chief Antonio Guterres, seen by AFP, said he will propose Salih for approval by the UN General Assembly -- typically a routine procedure -- for a five-year term starting on January 1.
He will be stepping into a firefighting role from day one.
The Geneva-based UNHCR, like many other UN agencies, has been clobbered by drastic international aid cuts. It has shed nearly 5,000 jobs this year -- more than a quarter of its workforce.
The UNHCR is grappling with surging global displacement, while under President Donald Trump, the United States -- traditionally the world's top donor -- has heavily slashed foreign aid, causing havoc across the globe.
Washington previously accounted for more than 40 percent of the UNHCR's budget, and its pull-back, along with belt-tightening by other major donor countries, has left the agency facing "bleak" numbers, according to Grandi.
The right to seek asylum, agreed by states in 1951, "is under threat -- more now than in living memory", the agency's chief spokesman Ewan Watson told a press conference on Friday.
"At times, it can feel like fear and division are drowning out compassion."
More than 117 million people are forcibly displaced from their homes, whether inside or outside their own borders.
UNHCR's funding has been slashed by 35 percent this year to date, "leaving millions without access to safety, food, shelter and vital protection services, let alone the means to re-start independently", said Watson.
- 'You are not alone' -
Numerous other candidates were in the running for the UNHCR job, including Paris Mayor Anne Hidalgo and Jesper Brodin, the outgoing head of the holding company managing most of furniture giant Ikea's stores.
Salih was a longstanding top official of the Patriotic Union of Kurdistan, the second-largest Kurdish Iraqi party.
He was also part of an interim authority established by the United States following the 2003 invasion.
He was one of Iraq's deputy prime ministers from 2006 to 2009, then served as the Kurdish prime minister from 2009 to 2012.
Fluent in English, Arabic and Kurdish, Salih served for four years as Iraq's president -- a largely ceremonial office traditionally held by a Kurd since 2005.
He is a senior fellow with the Middle East Initiative and the Belfer Center for Science and International Affairs of Harvard University.
Salih holds a civil engineering degree from the University of Cardiff and a doctorate in statistics and computer applications in engineering from the University of Liverpool, according to the Belfer Centre.
UNHCR is hosting its biennial Global Refugee Forum Progress Review in Geneva from Monday to Wednesday, bringing together more than 1,800 participants to try to find solutions for millions of displaced people worldwide.
Watson said: "The promise of asylum must be kept alive -- and refugees must not be consigned to the margins. So today we send a clear message to every person forced to flee: you are not alone."
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