Shafaq News
Iraq has faced months of disruption in its service and investment projects as the government has yet to send the 2025 budget tables to parliament, a delay that has frozen financing and slowed administrative work across ministries and provinces.
The state continues to operate under the monthly 1/12 spending rule stipulated in the Financial Management Law No. 6 of 2019. The mechanism prevents the launch of new projects and hinders the completion of ongoing ones, leaving contractors without payment and adding pressure on already fragile services.
The prolonged delay carries economic consequences for a country that is OPEC’s second-largest oil producer. Officials warn that uncertainty in funding slows oil field development, postpones payments to international companies, and disrupts reconstruction and humanitarian programs implemented with foreign partners.
Under the 1/12 rule, ministries may spend only a small fraction of their previous year’s allocations. This has affected the routine maintenance of power stations, water networks, and roads, contributing to visible service deterioration in several provinces.
Political and technical disagreements have stalled the completion of the budget tables. The delays come after widespread criticism of the earlier three-year budget for 2023–2025, which specialists say lacked transparency and contributed to the current disorder in financing.
Lawmaker Mahma Khalil said the three-year budget “was spent without transparency and surrounded by numerous suspicions that hindered service delivery.” He told Shafaq News that its spending structure “gave the government room to manipulate public money,” stressing the need for final accounts to determine real expenditures as 2025 approaches without a completed budget.
Read more: Recession alert: 2025 budget deadlock threatens Iraq
In Baghdad, Provincial Council member Amer Dawood al-Feyli said the absence of approved budgets has broadly halted projects, noting that the 2025 budget for the Baghdad Provincial Council “has not been released so far,” delaying service work and payments to contractors.
He said the problem is most evident in the Projects Directorate of the Baghdad Municipality, where contractors have stopped work due to the lack of financing. “This has directly affected service levels in the capital and slowed progress across key sectors.”
Provinces such as Basra and Nineveh report similar challenges, with stalled allocations affecting water treatment upgrades, school rehabilitation, and electricity projects. Several contractors have already suspended operations.
Planning officials say hundreds of service and infrastructure projects nationwide are awaiting funding decisions, including major road links, municipal services, and health facilities.
Former member of the parliamentary finance committee Mouin al-Kazemi said there is a push within the ruling Shiite Coordination Framework to “correct previous mistakes” by approving a realistic budget that reduces unnecessary spending and boosts revenue collection. This will require, according to him, a political alignment within the State Administration Coalition, which includes all major parties, alongside public acceptance of the financial adjustments ahead.
Budget delays have also affected transfers to the Kurdistan Region. Kurdish officials repeatedly expressed uncertainty over the 2025 tables, which have complicated financial planning in Erbil and al-Sulaymaniyah, particularly regarding salary payments and investment programs.
Al-Kazemi warns that repeated delays in Iraq’s budget cycle weaken long-term planning and discourage foreign investment, increasing operational risks for international and local companies and slowing reconstruction in areas recovering from conflict.
He also expects the 2026 budget to reach 150 trillion Iraqi dinars (114.5B USD), compared with the 2025 budget figure of 211 trillion dinars (161.1B USD) — of which only 150 trillion dinars (≈ 114.5B USD) were spent. “The gap underscores the need for a budget aligned with available revenues and designed to curb waste.”
Written and edited by Shafaq News staff.