Baghdad (IraqiNews.com) – Iran and Iraq have achieved a deal to remove long-standing financial hurdles, allowing Tehran to access an estimated $11 billion in blocked oil receivables in the coming weeks.
Following the Central Bank of Iran (CBI) Governor Abdolnaser Hemmati’s high-level meetings with senior Iraqi officials in Baghdad, both countries are preparing for several critical financial and economic agreements.
The settlement followed a series of bilateral discussions between Hemmati, Central Bank of Iraq (CB) Governor Nizar Hussein, Finance Minister Faleh Sari, and Iraqi Prime Minister Ali al-Zaidi.
Al-Zaidi issued orders permitting the Iraqi government to provide guarantee letters to Iranian contractors. The step will be directly supported by Iranian assets, which are now limited in Iraqi banking institutions.
The central bank leaders developed technical frameworks to reduce currency transfer barriers and allow non-oil commerce while avoiding typical clearing constraints in the US currency.
New procedures are being adopted at border entry points to speed up cross-border logistics and payments for private companies.
For years, Iraq has relied largely on Iranian gas and energy to operate its electricity grid. However, due to rigorous US restrictions on dollar and euro transfers involving Iranian institutions, Baghdad had to deposit these oil payments into extremely restricted local financial institutions.
This limitation accumulated a debt of $10 billion to $11 billion that Tehran could not readily receive.
The new arrangements enable Baghdad to gradually decrease its debt through bartering-based payments, goods-for-debt methods, and support for internal economic initiatives.