A half-billion-dollar effort to showcase Iraq’s holiest city to the world is coming down to the wire.

A half-billion-dollar effort to showcase Iraq's holiest city to the world is coming down to the wire as many contracts remain unsigned and funds are being hastily re-allocated.

Preparations for Najaf to become the Arab world's Islamic Capital of Culture next year are underway, but officials involved in its planning admit that time is short and much remains to be done.

"We only started work at the end of last year and Najaf will become the Islamic capital of culture from January 1, 2012," says Nizar Hussein al-Naffakh, a Najaf provincial council member and one of the event's organisers.

"There are real obstacles but we hope to overcome them in order to show our city in the most positive light," he adds.

The Najaf celebrations are part of broad efforts by Iraqi authorities to put the country back on the cultural map, after the US-led invasion of 2003 to oust Saddam Hussein led to years of brutal sectarian war.

Iraq is due to host an Arab League summit, initially scheduled for March 29 but now delayed until the end of May due to regional unrest.

Football's Gulf Cup is also to be held in the southern port of Basra in 2013, the same year that Baghdad becomes the Arab capital of culture.

In 2009 the culture ministers of Muslim countries chose Najaf as one of three Islamic cultural capitals in 2012 along with Dhaka for Asia and Niamey for Africa.

Authorities are also planning to translate 200 works of Islamic literature into English and French, as well as recitals of traditional Islamic music, though there will be no dance performances.

The overall budget for the Najaf ceremonies, including capital investment and cultural activities, is 537 billion Iraqi dinars ($455 million).

Several other projects designed to upgrade Najaf's infrastructure and that of twin city Kufa, however, either will not be ready for the start of next year, or are slated to be completed just before the ceremonies begin.

The city of Najaf is considered the holiest city of Iraq, for it contains the shrine of Imam Ali (AS), who was a cousin and son-in-law of the Prophet Mohammed, a military leader and writer.

Among Najaf's 170-odd hotels and hostels is just one four-star facility, with overall city-wide capacity barely able to accommodate the thousands of pilgrims, visiting on a daily basis the Imam Ali (AS) shrine.