COLOMBO, Feb 21 — Cash-strapped Sri Lanka said today it had exported tea worth US$20 million (RM95.88 million) to Iran to partially repay its US$251 million oil debts, with Colombo saying Tehran’s visiting foreign minister had expressed “satisfaction” at the deal.

“So far US$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.

Advertisement

The barter deal allows sanctions-hit Iran to avoid having to use 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.

Sri Lankan officials have previously said that the tea-oil swap did not break US sanctions on Iran, since tea was a food item and the deal did not involve Iranian blacklisted banks.

Advertisement

The island defaulted on its US$46 billion foreign debt in April 2022 and secured a US$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. — AFP