Iraq 'agrees deal to pay Egypt debt with oil'

A senior Iraqi government official has said his country is close to striking a deal to pay its $1.7bn of debt with Egypt in oil.

The high-level Iraqi source, who occupies a senior post in the Iraqi government, told al-Araby al-Jadeed that a joint Iraqi-Egyptian committee had reached an agreement on January 20. The Iraqi prime minister, Haider al-Abadi, had travelled to Cairo earlier this month.

The minister, who asked not to be named, said the oil shipments would be sent via the Gulf using Egyptian, Emirati and Iraqi tankers.

Mohammad Hassan, a member of the Oil and Energy Committee in the Iraqi parliament, described the deal to al-Araby as important, saying it ended a financial dispute between the two countries that began at the end of the first Gulf war. He said the deal would be formalised in Baghdad within a few weeks.

Iraq's central bank has refused many times to pay the debt in one instalment, as Cairo had demanded.

Iraq is facing a multi-billion-dollar budget deficit this year. The country has already struck a deal to delay by one year the last payment of Gulf war reparations to Kuwait.

This is an edited translation from our Arabic edition.