Liquidity crisis halts 50% of service projects in Iraq’s Diyala

Shafaq News- Diyala

Half of the service and construction projects in Iraq’s Diyala province have stalled due to the ongoing financial crisis and liquidity shortages, a local official told Shafaq News on Tuesday, urging authorities to release the province’s overdue allocations to ensure the continuation of projects.

Diyala Deputy Governor for Technical Affairs Hassan Al-Jubouri said that more than 200 billion Iraqi dinars (about $132M) in dues owed to the province by Baghdad have not been transferred, adding that the province has received only 30% of border-crossing revenues, with the remainder still unpaid since mid-last year.

The funding shortfall also halted the construction of the 100-bed Mendeli General Hospital in Diyala, which remains 90% complete. The hospital, expected to serve more than 60,000 residents near the Iranian border, is among dozens of projects nationwide affected by Iraq’s continued application of the 1/12 spending rule since 2025, a mechanism that limits monthly government expenditures and largely excludes capital and infrastructure projects.

Read more: Iraq’s budget paralysis: How the 1/12 rule reduced state finances to salary