* Administrative deficit bigger than financial deficit
* Lack of new government not to blame
BAGHDAD, July 6 (Reuters) - Iraq's budget fell into deficit in theory in the first half of this year but in practice mismanagement has paralysed projects and much of the money has not been spent, an official said on Tuesday.
Iraq's parliament in January approved a 2010 budget that set federal spending at 84.7 trillion Iraqi dinars (around $72 billion) and a deficit for this year of 22.9 trillion dinars ($19.6 billion).
But so far that deficit is just ink on paper due to poor governance, said Abdul-Hussein al-Anbaki, an advisor on economic issues to Prime Minister Nuri al-Maliki.
"There is an administrative deficit in the ministries which have projects. It is greater than the financial deficit in the federal budget," said Anbaki, referring to widespread corruption and an unwieldy bureaucracy afflicting many government agencies.
"So part of the financial deficit will actually be made up because of the administrative deficit which prevents us from turning money into real projects," Anbaki told Reuters.
The failure of Iraqi politicians four months after an election to form a government and appoint a new prime minister had nothing to do with it, he said. The incumbent administration has a caretaker role.
"The current government has full capabilities and authorities except where a minister or a director general of a department is too lazy, or doesn't want to work, and is using the political problem as a pretext," he said.
Poor governance preventing the Iraqi government from spending its money has been a major problem since the 2003 U.S-led invasion. Violence has also often prevented officials from carrying out public works, as has a shortage of qualified bureaucrats.
Iraq held a general election on March 7 that many Iraqis had hoped would bring greater stability and prosperity seven years after the fall of Saddam Hussein set off a bloody sectarian war.
Eleven major oilfield development projects signed by the outgoing government with international oil firms promise to turn Iraq into a top oil producer and give it the billions it needs to rebuild after decades of war and sanctions.
But no one won the vote outright, leading to prolonged political wrangling among once dominant Sunnis, majority Shi'ites and ethnic Kurds over the formation of a government.
(Editing by Michael Christie/Ruth Pitchford)
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