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IAM Reader is not enough: App Configuration data access requires a data-plane role. Assign the identity either the Azure App Configuration Data Reader or Azure App Configuration Data Owner role on the store. (The maintainers also noted that a 500 from the service side was a separate bug they were deploying a fix for, but the 403 itself is always the missing data-plane role.)
Source: https://github.com/Azure/AppConfiguration/issues/206