Iraq’s financial crisis has worsened and compelled it to repay its debts to Iran in Iraqi dinars, Iraqi officials told Middle East Eye.
The country’s currency has been struggling for months against the dollar since the US Federal Reserve imposed restrictions on how its central bank trades dollars received from oil sales.
The subsequent liquidity crisis has meant the government is failing to pay the salaries of millions of public servants, as well as pensions and payments to other beneficiaries of social welfare programs.
Iraq has been one of the largest importers of Iranian goods over the past two decades, particularly gas, electricity, food and construction materials.
Official trade exchange between the countries amounts to approximately $14 billion. Because of US sanctions imposed on Iran in 2018, Iraq has struggled to pay Iran for its purchases since the fiscal 2019-20.