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 reporters 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.
Washington had exempted Baghdad from sanctions against Iran and allowed it to import gas and electric power.