The attack occurred at about 11:30 a.m. local time (0830 GMT) when a car bomb went off near the convoy of Mohammed al-Darraji, the minister of reconstruction and housing, in Mansour district, the source said on condition of anonymity.
Two of Darraji's bodyguards were among the wounded by the blast, which also destroyed several civilian cars nearby, the source added.
The attack took place about three weeks before the Arab League summit slated for March 29.
Baghdad said it has completed its preparation for the summit and is ready to receive the Arab leaders. But recent violence across the country, including in Baghdad, is a setback to the Iraqi efforts to restore normalcy ahead of the summit.
Iraq sees the summit as a significant milestone in its history that would lead the country to play a powerful and positive role in the Arab world.
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