The announcement comes following banking agreements between the governors of the two central banks signed last February.
“President Hassan Rouhani and Iraq’s Prime Minister Adel Abdul Mahdi were particularly anxious about putting into effect the banking and financial agreements signed by the two sides,” Abdolnaser Hemmati wrote in an Instagram post.
The Iraqi leader arrived in Tehran on Saturday for a two-day visit, heading a high-ranking delegation to discuss bilateral ties and regional developments, Financial Tribune reported.
Hemmati said Iran’s [gas and electricity] export to Iraq will exceed $4 billion in the current fiscal that started on March 21. This is different from more than $8 billion worth of private sector exports to the country.
“Given the increase in our export to the neighboring country, making informed decisions about building and sustaining financial ties is indeed crucial,” he wrote.
During Hemmati’s trip to Iraq in February, an agreement was signed to set up a monetary channel for facilitating bilateral payments. The agreement was signed by Hemmati and his Iraqi counterpart, Ali Al-Allaq, in Baghdad.
As per the agreement, Iraqi companies can open bank accounts in Iranian banks and use the Iraqi dinar in their transactions. Additionally, the CBI will open euro and dinar bank accounts in Iraq to be used for settling oil and gas export payments.
The CBI earlier said on its website that Iraq’s past debts related to gas and electricity imports from Iran would be cleared through the new mechanism. Payments for all future two-way trade will be settled within the same procedure.
In a press conference after his meeting with Abdul Mahdi on Saturday, Rouhani expressed the hope that past agreements between both parties would be finalized during the Hemmati’s upcoming visit to Baghdad.
"With regard to financial and banking relations, effective steps have been taken over the past months that we hope will be finalized during the visit of the CBI head.”
Meeting Iraq’s Finance Minister
The CBI boss conferred with Iraq’s Finance Minister Fuad Hussein on Sunday to discuss banking and financial issues, boosting trade, striking an import-export balance between two sides and settling Iraqi debts.
Hemmati recalled the high volume of trade exchange between two neighbors hoping that in the light of the favorable conditions and new capacities a balanced trade balance between the two nations would emerge.
Pointing to the obstacles Iranian bank branches face in Iraq, he referred to promoting non-dollar trade with Iraq as a measure to overcome the hurdles.
“Iran-Iraq banking transactions are based on the dinar. This is a key to boosting banking ties between two countries which also help address other related issues. All efforts should be made to facilitate Iran’s banking operations in Iraq”, the CBI website quoted him as saying.
Hussein pointed to the close bilateral trade and political relations and expressed Iraq’s willingness to advance the need to balance bilateral trade.
The idea of a level playing field in trading will be beneficial for both sides and we too are working to find solutions, he was quoted as saying.