Sri Lanka is unable to repay to Iran a debt that has accumulated in oil deals. Countries agree Sri Lanka will pay off debt through monthly supply of Ceylon tea
Iran has agreed to accept tea deliveries of tea from Sri Lanka, instead of paying off $ 251 million in debt from oil deals between the two countries. This was reported today (Thursday) by the media in the Islamic Republic.
Alireza Firman-Pak, head of the Iranian Trade Promotion Organization, said that in the contacts between the countries it was agreed to pay the debt through a monthly shipment of “Ceylon tea” made in Sri Lanka – a tea that is especially loved by the Iranians.
“The agreement was reached on Tuesday,” Firman-Pak said. “Sri Lanka will export tea to Iran every month, thus closing a $ 251 million debt that has accumulated following the export of Iranian oil to Sri Lanka nine years ago.”
Firman-Pak noted that trade ties between the two countries have “tremendous potential”. He said the volume of exports from Iran to Sri Lanka – which is not related to oil – is currently estimated at less than $ 100 million a year. He added that the agreement would allow Iran, which is subject to international sanctions, to avoid paying for the import of “Ceylon tea”.
The Sri Lankan government has said it plans to send $ 5 million worth of “Ceylon Tea” shipments to Iran each month, until it settles the debt. Sri Lanka’s economic situation is dire, and the corona plague – which has shut down its tourism industry – has only exacerbated the situation. It is estimated that this is the first time that Sri Lanka is using tea exports to pay off debt to a foreign country.
The Sri Lankan government has stressed that the agreement does not violate the international sanctions imposed on Iran because of its nuclear program – because for humanitarian reasons tea is included in the food category.