Planning: Contractors Owed 8 Trillion Dinars; 2027 Framework Completed

The Ministry of Planning announced today, Friday, the completion of the first draft of the 2027 investment budget framework, confirming accumulated contractor dues totaling approximately 8 trillion Iraqi Dinars. Undersecretary of the Ministry of Planning, Maher Hammad Jawhan, clarified the ministry's pivotal role in preparing the 2027 programs and performance budget. Jawhan indicated the ministry supports this program through two frameworks: the first explains detailed concepts, leveraging the ministry's past experience in this field. The second focuses on measuring this budget, directly linking outputs to inputs. Its fundamental idea avoids detailed financial expenditure classifications for immediate items. Instead, it determines an entity's allocated amount and its intended output, like building a school to serve more citizens, rather than specifying funds for fuel or worker wages. Jawhan added that meetings are ongoing, with representation from the Director-General of the Economic and Financial Policies Department, and Jawhan's participation as Acting Minister of Planning, to define the contours of the programs and performance budget related to the investment aspect. Regarding the investment framework for the upcoming budget, Jawhan stated that after comprehensive reviews with sectoral entities, governorates, and the Ministry of Finance, the Ministry of Planning has finalized its first draft. The ministry developed this framework based on three or four options, with the fourth option being preferred. One option considers the spending needs of ministries, entities, and governorates for the coming year, considered but not solely relied upon. The second option depends on the Ministry of Planning's vision according to projects and their progress. The third option focuses on the Ministry of Finance's capacity and the entities' implementation capabilities. Ministry of Finance capacity is assessed based on past funding provision, estimating 2027 resources while considering the country's problems, obstacles, regional crisis challenges, and their impact on the economy's primary resource. Concerning the prioritization of projects amidst financial pressures, Jawhan mentioned the final adopted option largely depends on entities' and ministries' actual 2026 achievements, including advance payments for completed works, required appropriations, and a minor addition for expected items. He noted the amount is under review, with efforts to make it approximately 25 percent of the expected budget. A portion will fund existing and new loans, while the other will support the general budget. This percentage is expected to range from 20 to 25 percent of the state's general budget. Jawhan affirmed the ministry considered resource scarcity from the outset of its discussions with ministries and sectoral entities. The ministry established a clear mechanism for setting priorities, based on giving precedence to projects closest to completion, then selecting projects most needed by citizens, and ranking other priorities accordingly. He emphasized the ministry's view against adding new projects unless absolutely critical, given numerous ongoing projects already providing services. He stressed completing and delivering existing services is preferable to starting new, potentially unfinished projects. The goal is to complete existing projects, adding new ones only in extremely urgent cases, perhaps through a formula allowing entities completing current projects to initiate new ones. Regarding the number of ongoing and stalled projects, Jawhan clarified the exact figure is unavailable but estimated at about 3,000 ministerial-level projects. The ministry conducted significant budget streamlining this year by reviewing project components and those not yet started, requesting entities to review feasibility studies and retention possibilities, thus streamlining all ministries' and governorates' budgets. He added that some projects with high completion rates (97-98 percent) remain pending, and the directive is for them to become operational and exit the general budget. He underscored the regrettable situation of projects awaiting simple services, like a water or electricity pipe, for completion. Jawhan stated the ministry has a list of stalled projects, and detailed figures will be provided later. He expressed concern that current conditions might lead to a recurrence of stalled and suspended projects. Information was requested on ongoing projects that have stopped; while most entities haven't officially reported a halt, confirmed data indicates a significant drop in existing projects' productivity rates. Over the past three years, the ministry made extensive efforts to revive many projects stalled since the 2014 crisis, bringing them back into service. However, the current crisis could repeat that experience. Projects returning to a stalled or suspended state incur severe consequences: deterioration, delayed service, changing item prices, and other issues. Regarding financial entitlements for contractors and companies, Jawhan confirmed documented accumulated dues for contractors totaling approximately 8 trillion Iraqi Dinars. The state has begun settling a portion in the governorates, with a Prime Ministerial directive to settle these amounts in coming months, potentially exceeding 20 percent of the total. He stressed contractors, representing the private sector, are building partners whose work provides thousands or millions of job opportunities. He reaffirmed the ministry's commitment to strongly advocate for and support the Ministry of Finance and Council of Ministers in securing private sector entitlements for projects.