Deputy Foreign Minister for Economic Diplomacy says the Iraqi government has vowed it would soon settle debts owed to Iranian companies for various infrastructure projects executed in the Arab country in recent years.
Mehdi Safari said on Monday that he had received guarantees about the settlement of the debts during a meeting earlier in the day in Baghdad with Iraqi Prime Minister Mohammed Shia’ Al-Sudani.
Safari quoted Sudani as saying that Iraq’s 2023 budget will also provide for the funds needed for completion of a key railway as well as a highway linking Iranian border cities to the Iraqi railway and highway networks.
Iranian firms have been a major supplier of technical and engineering services and equipment to Iraq in recent years amid efforts in the Arab country to recover from years of invasion and militancy.
However, Iranian contractors working for Iraqi government agencies and state entities have had problems receiving payments for their projects mainly because of US sanctions on Iran.
Safari, who also met Iraqi President Abdul Latif Rashid in Baghdad on Monday, said that Iran and Iraq had agreed to further boost their trade and economic ties.
He said the two countries would resume holding meetings under a key intergovernmental economic committee format years after the initiative was suspended.
He said a first meeting of the intergovernmental committee is expected to be convened within the next few weeks.
According to a report, the Iraqi Central Bank and its Iranian counterpart have signed an agreement to pay Baghdad’s debts to Tehran.
Signing the agreement aims to “attain mutual consent for debt payment,” an Iraqi Central Bank source told Anadolu Agency on condition of anonymity because he was not authorized to speak to the media.
The source said Iraq’s due debts for Iran, worth $2 billion, are due to imports of electricity and gas as well as other goods over the past years.
Iraq has imported 1,000 megawatts of electricity from Iran for years to cope with energy shortages.
The U.S. in August had re-imposed the first round of economic sanctions on Iran, which mainly target the country’s banking sector.
In November, Washington imposed a second round of sanctions, targeting Iran’s energy sector.
Washington had exempted Baghdad from sanctions against Iran and allowed it to import gas and electric power.
