Iraq spent $450 million [540 billion Iraqi dinars] in preparation for the Arab League Summit, which has now been postponed for a year.
The money was spent planting palm trees along highways, re-paving roads and restoring a palace of former dictator Saddam Hussein, according to a report from Reuters.
Arab League Secretary-General Amr Moussa said on Thursday the summit had been postponed to March 2012 after being put off twice this year amid regional turmoil and animosity towards Iraq by some Gulf Arab states after it criticised Bahrain's crackdown on Shia'ite protesters.
Revamping Iraq's capital included the refurbishment of six of Baghdad's main hotels and repaving the city's airport road, one of the most dangerous to travel on at the height of the war.
Many are questioning the amount of money spent on a regional summit expected to be attended by heads of state.
"What will we get from the summit? What is the benefit? We, the people, don't understand the language of politics, we seek benefit," a Baghdad barber told Reuters.
"They should have spent it on the electricity sector, which has suffered the most damage. I am 60 years old and in my life, I haven't witnessed any benefit coming from Arab summits."
Ali al-Moussawi, Prime Minister al-Maliki's media adviser, said he was confident the money had not gone to waste.
"It is impossible to ignore our hotels and leave them in such a condition," Moussawi said.
Around $40 million of the allocated $450 million was used to renovate Saddam's Republican Palace, used as a U.S. embassy and military headquarters after the 2003 invasion, while Al Jazeera put the figure at $400m.
The 60-year-old palace, expected to house Arab leaders, has been kitted out with giant chandeliers and paintings of Babylon. Date palms adorn the garden, which also has a swimming pool.
"We had to work around the clock. Everything needed to be repaired, redone," Osman Mimarsinanoglu, chairman of the Turkish Gorkem company told Reuters before the postponement.
The summit may also be a test of readiness for Iraq's army and police. U.S. troops are scheduled to leave by year-end.