Baghdad (IraqiNews.com) — The United States Federal Reserve has sent a new $500 million cash cargo to the Central Bank of Iraq, providing additional dollar liquidity as Baghdad grapples with rising financial pressures and disruptions to its oil-dependent economy.

The shipment was announced by Iraq’s national news agency, citing an official source who claimed the dollars will be used for permitted overseas transfers and transactions involving Iraqi citizens.

Further supplies are planned each month, with a government official estimating annual cash delivery of $8 billion to $10 billion.

These cash payments are part of Iraq’s peculiar financial relationship with the United States.

Proceeds from Iraqi oil exports are mostly placed in an account at the Federal Reserve Bank of New York, with Baghdad obtaining dollars via permitted transfers and cash shipments administered by the Central Bank of Iraq.

The new supply comes at a critical moment for Iraq’s budget.

The disruption in the Strait of Hormuz has increased pressure on a nation that relies significantly on oil exports to support government expenditures and get foreign currency.

Iraq’s enormous public-sector pay bill contributes to this vulnerability.

Millions of Iraqis rely directly or indirectly on government wages, pensions, and social benefits; therefore, stable oil income and liquidity are crucial to the national budget.

Baghdad has lately expressed increased worries about its capacity to fulfill expenditure obligations if oil earnings continue low, strengthening long-standing demands for Iraq to diversify government income and lessen its reliance on petroleum exports.

The most recent dollar cargo should offer further liquidity to Iraq’s banking system, but it also shows the country’s vulnerability to both oil-market shocks and its financial ties with Washington at a time of rising regional tensions.