On July 2 2008, Bulgaria received in full the money it was owed by Iraqi – $360 million, the press service of the Finance Ministry said in a statement, noting that Bulgaria is the first country to reach an agreement on arranging its receipts by a lump-sum payment in cash.

“I am satisfied with the strict fulfilment, on behalf of Iraq, of the commitments undertaken under the bilateral debt agreement between our countries. I want to remind that our country reached the best parameters in arranging repayment of the old debt, compared to other countries. I am grateful to our partners from the Iraqi finance ministry, as well as to the useful consultations with the US treasury department. I thank as well my experts, who strictly stuck to the instructions in the numerous talks with the Iraqi representatives,” Bulgarian Finance Minister Plamen Oresharski said after the transaction.

One third of the sum received by Bulgaria was the principal of outstanding loans and the rest was interest and penalties, which would be recorded as one-off revenue in the Bulgarian budget.

A future visit of the Iraqi finance minister to Bulgaria is currently being co-ordinated. “Other mutually beneficial directions for co-operation between the two states will be discussed during the visit,” Oresharski said. 
 
In 2004, Iraq's creditors from the Paris club of countries agreed to write off 80 per cent of the debts and restructure payment of the remaining 20 per cent over a period of 23 years, with a six-year grace period. The standard clause for equal treatment of all creditors was also included in Iraq's agreement with the Paris club creditors.

This scheme was not used by the US, Malta, Slovakia and Cyprus, who fully wrote off their receipts.

Talks to settle the debt started in September 2005. They saw the discussion of different options under the framework of the Iraqi agreement with the creditors from the Paris club. The meeting of the Bulgarian Finance minister with his Iraqi counterpart at the end of 2006 and the ones he carried out during his visit to the US department of treasury in February 2007 gave a new impetus to the negotiations.

On November 8 2007, the Government approved a bilateral agreement between Bulgaria and Iraq. The memorandum settles Bulgaria's claims on funds extended as loans before 1989, which claims stood at $1.86 billion, including $1.26 billion in principal and a further 600 million in interest. Under its terms, Iraq recognised it owed a total debt of $3.51 billion and Bulgaria agreed that it would be paid 10.25 cents for each dollar owed.