Yahya Al-Eshaq, head of the Iran-Iraq Joint Chamber of Commerce, announced a partial release of Iran's forex assets blocked in the Arab country.
"A part of the blocked resources has been allocated to meet the needs of Iranian pilgrims, while another portion is being used to import essential commodities," Fars New Agency quoted him as saying.
According to Al-Eshaq, the released fund are closes to $3 billion.
"This move should have a positive effect on markets as it has been used to address the central bank's needs and by basic goods." He did not go into details nor say what basic goods are being imported.
Iraq has been a major importer of Iranian energy and other goods in the past two decades, namely gas, electricity, food and construction materials.
Reimbursement of debts to Iran has been impeded by the 2018 economic blockade imposed by former US president, Donald Trump. After enforcing the sanctions, the US granted Iraq several temporary waivers to buy electricity and gas from Iran.
Several meetings have been held and both sides say they have been able to remove obstacles to settling the debts.
Due to the economic and banking restrictions, mainly related to gas and electricity export, billions of dollars of Iranian forex assets are blocked in Baghdad, reportedly to the tune of $7 billion.
Last year, the government in Baghdad paid $1.6 billion of the debt related to gas imports. The National Iranian Gas Company said earlier that Iraq owes more than $6 billion in unpaid energy bills. The debt includes $2 billion in arrears and $1 billion in contract violations.
Moreover, three billion dollars are blocked by the Trade Bank of Iraq due to the US sanctions and tough banking restrictions imposed on Tehran.
Iran has exported 65 billion kilowatt-hours of electricity to Iraq since 2005 worth an estimated $6.2 billion. The country is one of the biggest regional markets for Iranian energy.
Official annual trade exchange between the two neighbors is in the range of $14 billion while significant trade goes on at the joint borders.
