Iran has agreed to accept Ceylon tea in exchange for some $251 million in oil debt from the South Asian island nation of Sri Lanka, Iranian media report.
Alireza Peyman-Pak, the head of Iran’s Trade Promotion Organization, said on December 23 that “in recent negotiations, we reached a written deal to reimburse Iran’s debt and interest on it in the form of a monthly shipment of tea produced in Sri Lanka.”
According to Iranian media, Peyman-Pak said a deal was reached in which Sri Lanka will export tea to Iran every month “to settle a $251 million debt for Iranian oil supplied to Sri Lanka nine years ago.”
Sri Lanka, an island nation of some 22 million people, was formerly known as Ceylon.
Peyman-Pak said the deal will save Iran from having to use scarce hard currency to pay for imports of the widely consumed product.
Iran has been hit hard since the United States pulled out of the 2015 Iran nuclear deal and began reimposing crippling financial sanctions against Tehran.
Sri Lankan Plantation Industries Minister Ramesh Pathirana emphasized that the arrangement will not violate international sanctions as tea is exempt due to it being categorized as a food item.
Iranian banks that have been blacklisted under U.S. sanctions will not be involved in the transaction, he added.
Sir Lanka has also been experiencing severe financial difficulties, including a severe shortage of foreign currency. National reserves have declined to just $1.6 billion, leaving the government hard-pressed to meet payments for oil and food imports. (AFP)