In this handout photo released by the Iraqi prime minister's office, Prime Minister Mohammed Shia al-Sudani (center) attends a signing ceremony for a security agreement between the Secretary of Iran's Supreme National Security Council Ali Shamkhani (left) and Iraq's National Security Advisor Qasim al-Araji (right) in Baghdad on March 19, 2023. (IRAQI PRIME MINISTER MEDIA OFFICE / AFP)

TEHRAN - A top Iranian official said Iran and Iraq have agreed on new mechanisms, enabling the former to use its frozen oil and electricity exports money in the latter's banks, official news agency IRNA reported on Monday.

Secretary of Iran's Supreme National Security Council (SNSC) Ali Shamkhani made the remarks in an interview with IRNA following his Sunday visit to Iraq.

Secretary of Iran's Supreme National Security Council Ali Shamkhani said the new mechanisms will allow Iran to use its arrears, currently frozen in Iraqi banks due to the US sanctions, to purchase essential goods

Shamkhani said the new mechanisms will allow Iran to use its arrears, currently frozen in Iraqi banks due to the US sanctions, to purchase essential goods.

He stressed that these mechanisms, along with the agreements reached with the United Arab Emirates (UAE) during his Thursday trip to Abu Dhabi on facilitating bilateral trade through using the UAE's national currency dirham, will help improve the Iranian foreign currency market.

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Shamkhani added the trip to Iraq was in line with the Iranian government's efforts to improve relations with neighbors and said the previous visits to China and the UAE by him and his team all led to significant achievements.

He noted that during the visit to Iraq, solutions were worked out in talks with high-ranking economic, banking, political and security Iraqi officials to remove obstacles to enhance all-out cooperation.

During his trip, the two countries also signed an agreement on security cooperation to protect their common border.

Iraq has secured special waivers from the US sanctions on Iran to be able to import natural gas and electricity from its eastern neighbor. However, the sanctions, which also target Iran's banking relations with the rest of the world, have made it difficult for Baghdad to pay for its energy imports from the country.

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In early January, the governor of the Iranian central bank put the value of Iran's frozen money at Iraqi banks at $10 billion, according to Iran's Tejarat News website.