Fiscal policy, particularly its expenditure side, is a fundamental tool for achieving economic growth and stability, aiming to stimulate economic activity and address imbalances in macroeconomic indicators. However, the effectiveness of this expenditure policy varies based on the nature of structural, political, and economic challenges. This research aimed to assess the impact of the effectiveness of expenditure policy on macroeconomic indicators in Iraq, to determine its potential and identify the challenges it faces. The study hypothesized that this policy has varying effects on some macroeconomic indicators in Iraq during the research period, and that the effectiveness of these elements is influenced by the structural, political, and economic challenges facing the country, limiting the achievement of economic stability and sustainable growth. Relying on the modern methodology of co-integration according to the Autoregressive Distributed Lag (ARDL) model, the results of the econometric analysis showed that investment expenditure (X1) has a positive but insignificant relationship with Gross Domestic Product (GDP), while government expenditure (X2) showed a positive and significant relationship. Concerning total public debt, the results revealed a significant inverse relationship with investment expenditure (X1), and a significant positive relationship with government expenditure (X2).

The research recommends the necessity of enhancing local and foreign investments by improving the business environment, facilitating procedures, providing tax incentives, and improving infrastructure for investors. Additionally, it recommends restructuring government expenditure by directing spending towards productive sectors such as agriculture and industry, while reducing operational expenses in favor of sustainable investment projects.