The "relative shortage of trained budgetary, procurement and other staff with the necessary technical skills as a factor limiting the Iraqi government's ability to plan and execute its capital spending," the GAO said.

"Violence and sectarian strife remain major obstacles to developing Iraqi government capacity," it said.

Senators angry

Carl Levin called for Iraq to fund
its own reconstruction [AP]
The GAO also estimated that this year Iraq could generate $67bn to $79bn in oil sales.

The report prompted US senators to renew their calls for Baghdad to pay more for Iraqi reconstruction, which has been heavily supported by US taxpayers.

Carl Levin, a Democratic senator, said in a statement: "The Iraqi government now has tens of billions of dollars at its disposal to fund large-scale reconstruction projects.

"It is inexcusable for US taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves."

'Part of the picture'

But a senior US embassy official in Baghdad said Iraq was making progress in using oil revenues to rebuild its shattered infrastructure.

The official told the Reuters news agency the report captured only part of the picture when it said Baghdad was failing to spend on reconstruction, leaving much of the task to Washington.

"The impression that somehow the Iraqis are sitting back on these huge growing balances does not really fit what is happening," the official, who did not want to be identified, said.

The US official said he hoped bureaucratic changes to facilitate contracts and to authorise spending would help Iraqi officials spend the money.

"They are looking for ways to de-bottleneck their own expenditures," he said.