Sri Lanka, which suffers from a shortage of foreign currency, announced that it had exported tea worth $20 million to Iran to pay part of its oil debt amounting to $251 million, noting that the Foreign Minister of Tehran, who is currently visiting it, expressed his “satisfaction” with the deal.
“So far, tea worth $20 million has been exported to Iran under the barter trade agreement,” Sri Lankan Prime Minister Dinesh Gunawardena’s office said in a statement after holding talks with Iranian Foreign Minister Hossein Amir Abdollahian.
The tea-for-oil deal was agreed upon between the two countries in December 2021, but the export of tea was delayed due to the economic crisis that struck Colombo and forced then-President Gotabaya Rajapaksa to step down in July 2022.
The barter agreement allows Iran, which is under Western sanctions, to avoid using hard currencies to pay for tea imports.
Sri Lankan officials had previously said that exchanging tea for oil did not constitute a violation of US sanctions on Iran, because tea was a food item and there was no need to deal with Iranian banks listed on blacklists.
The island defaulted on its $46 billion foreign debt in April 2022 and received a $2.9 billion bailout from the International Monetary Fund early last year.
Ceylon tea, known as Jazeera tea during the colonial era, constituted about half of Iran’s consumption in 2016, before recording a decline in recent years.
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