Iraq: Operating costs absorb 94% of federal budget, investment at 6%

BAGHDAD, Iraq — Iraq's Economic Observatory said that as of August 1, 2026, current expenditures continued to take the largest share of the general budget, with personnel salaries, maintenance of existing assets and grants accounting for about 94% of government spending. Within that category, salaries, retirement pensions and social welfare allocations represented roughly 81% of total budget outlays, according to the observatory's data. The observatory reported that the Kurdistan Region received an 11.58% share of the general budget. Investment spending amounted to only about 6% of total expenditures and was distributed across sectors including construction, industry, education and agriculture. Agriculture received the smallest allocation within the investment budget at 0.02%, the data showed. The observatory said the heavy weight of current spending limits the economy's capacity to carry out development projects and weakens the prospects for sustainable growth in productive sectors.