February 7, The Iran Project - Governor of Iran�s central bank Abdolnaser Hemmati arrived in the Iraqi capital on a two-day visit Tuesday (Feb. 5) to discuss banking relations and a payments backlog related to Iran�s gas and electricity exports to the Arab country.

While in Baghdad he conferred with Iraqi Finance Minister Fouad Hussein, his counterpart Ali Mohsen Ismail al-Alaq,�President Barham Salih and Prime Minister Adel Abdelmahdi.

An agreement was also signed between the two countries on a payment mechanism which is to facilitate the settlement of Baghdad�s debts to Tehran.

Abdolnaser Hemmati and Fouad Hussein held talks and�discussed the latest state of cooperation and economic ties between the two countries. They also�explored avenues for easing trade and monetary exchanges between the two countries based on the agreement signed earlier by their governors of central banks.

Following negotiations between members of their delegations in Baghdad�s Al Rasheed Hotel, governors of the central banks of Iran and Iraq on signed an agreement on a payment mechanism which is to facilitate the settlement of Baghdad�s debts to Tehran over gas and electricity imports, among others.

Upon arrival in Baghdad, Hemmati had told IRNA that his trip was aimed at removing the obstacles that hinder the settlement of Iraq�s debts to Iranian exporters.

In addition to natural gas and electricity, Iraq imports a wide range of goods from Iran including food, agricultural products, home appliances, and air conditioners.

Iran is currently Iraq�s top trade partner, having sharply increased their trade exchanges in recent months despite US sanctions on the Islamic Republic.

The US government in November re-imposed unilateral sanctions against the Islamic Republic of Iran and urged all countries in the world to stop doing business with Iran.

However, in a bid to meet its energy needs, Baghdad requested the US to exempt the Arab country from its unilateral sanctions against the Islamic Republic and was finally granted a 45-day waiver, which was later extended for another three-month period.

After giving the waiver, the US declared that Iraq could continue to import natural gas and energy supplies from Iran as long as it did not pay Iran in US dollars.

Therefore, the country officially removed the US dollar in trade with Iran and started working on the use of local currencies in its economic ties with Tehran.

Furthermore, the governor of the Central Bank of Iran (CBI) and Iraqi premier met and discussed the ways of boosting bilateral cooperation, with a focus on banking ties and financial exchanges to remove the hurdles in the trades between the two neighbors.

According to Hemmati, two sides will put all-out efforts to overcome shortcomings in financial transactions, which have created some hurdles for Iranian exporters.

Hemmati and accompanying delegation left Baghdad for Karbala late on Wednesday on a pilgrimage to the holy sites in the city and then they left for Tehran on Thursday.