Sri Lanka exports $20 million worth of tea to Iran as part of partial repayment of oil debt 

Cash-strapped Sri Lanka said on Wednesday that it had exported tea valued at $20 million to Iran as part of its efforts to partially settle its $251 million oil debts. Colombo said Tehran’s visiting foreign minister had expressed “satisfaction” at the deal.

According to a statement from Sri Lankan Prime Minister Dinesh Gunawardena’s office, the country has exported $20 million worth of tea to Iran under the barter trade agreement.

The agreement was reached in December 2021, but the exports were delayed due to Colombo’s economic crisis, which led to the resignation of then-president Gotabaya Rajapaksa in July 2022.

The barter arrangement enables Iran, which is grappling with sanctions, to acquire popular tea imports without depleting its scarce foreign currency reserves.

“So far $20 million worth of tea has been exported to Iran under the barter trade agreement,” Sri Lankan Prime Minister Dinesh Gunawardena’s office said in a statement after talks with Iranian Foreign Minister Hossein Amir-Abdollahian.

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The tea-for-oil deal was agreed upon in December 2021, but exports were delayed by Colombo’s economic crisis that forced then-president Gotabaya Rajapaksa to step down in July 2022. The barter deal allows sanctions-hit Iran to avoid using up scarce hard currency to pay for imports of popular tea.

It also allowed Sri Lanka to pay with tea, as the country was short of foreign currency.

The island defaulted on its $46 billion foreign debt in April 2022 and secured a $2.9 billion IMF bailout early last year.

Ceylon tea, known by the island’s colonial-era name, made up nearly half of Iran’s consumption in 2016. However, the proportion has declined in recent years.

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With inputs from AFP.