Sri Lanka repays $20m Iranian oil debt with tea

Cash-strapped Sri Lanka said Wednesday it had exported tea worth $20 million to Iran to partially repay its $251 million oil debts, with Colombo saying Tehran’s visiting foreign minister had expressed “satisfaction” at the deal.

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“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.

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 having to use up scarce hard currency to pay for imports of popular tea.

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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.

© Agence France-Presse