Iraq has been dealing with months of delays in its service and investment projects because the government still hasn’t sent the 2025 budget tables to parliament. Without an approved budget, funding is stuck, and ministries and provinces can’t move forward with their plans.
Right now, the state is running on the monthly 1/12 spending rule from the Financial Management Law of 2019. This rule lets each ministry spend only one-twelfth of last year’s budget every month. It keeps the government running, but it also stops new projects from starting and slows down the completion of ongoing ones. Many contractors haven’t been paid, and essential services are feeling the pressure.
The delay has real economic consequences for Iraq, the second-largest oil producer in OPEC. Officials say uncertainty in funding is slowing oil field development, delaying payments to foreign companies, and affecting reconstruction and humanitarian programs carried out with international partners.
Because of the 1/12 rule, ministries can only use a small part of their previous allocations. That has affected maintenance for power plants, water systems, and roads — all of which has made services worse in several provinces.
Political disagreements and technical issues are behind the slowdown in preparing the budget tables. The delays follow heavy criticism of the earlier three-year budget (2023–2025), which many experts say lacked transparency and created today’s financing problems.
Lawmaker Mahma Khalil told Shafaq News that the three-year budget “was spent without transparency” and surrounded by “many suspicions.” He believes its structure gave the government room to misuse public money and said final accounts are needed to understand what was really spent.
In Baghdad, Provincial Council member Amer Dawood al-Feyli said the lack of an approved budget has halted projects across the capital. He explained that the 2025 budget for the Baghdad Provincial Council still hasn’t been issued, which has delayed services and payments to contractors. He noted that the Projects Directorate of the Baghdad Municipality has been hit the hardest, with contractors stopping work due to a lack of funding — directly harming service levels in the city.
Other provinces, including Basra and Nineveh, are reporting similar problems. Projects for water treatment, school repairs, and electricity upgrades are all on hold, and many contractors have already walked away.
Planning officials say hundreds of service and infrastructure projects across Iraq are waiting for funding decisions. These include major road connections, municipal services, and new health centers.
Former finance committee member Mouin al-Kazemi said the ruling Coordination Framework wants to fix past mistakes by approving a more realistic budget that cuts waste and increases revenue. But he emphasized this will require political agreement within the State Administration Coalition and public support for upcoming financial changes.
The delays have also affected the Kurdistan Region. Kurdish officials say they don’t know what to expect from the 2025 budget tables, making financial planning difficult for both Erbil and Sulaimaniyah — especially when it comes to salaries and investment programs.
Al-Kazemi warned that repeated budget delays hurt long-term planning and scare off foreign investors. They increase risks for both international and local companies and slow down reconstruction in areas recovering from war.
Looking ahead, he expects the 2026 budget to be around 150 trillion Iraqi dinars (about $114.5 billion), compared with the much larger 2025 budget of 211 trillion dinars (around $161 billion) — though only 150 trillion dinars were actually spent. He says this gap shows the urgent need for a budget that matches real revenues and cuts down waste.
