Sri Lanka settles USD 60 million Iranian oil debt with tea

Sri Lanka Tea Board has announced that USD 60 million of the USD 251 million owed by Sri Lanka to Iran for fuel imports since 2011 has been paid through tea exports. This initiative follows a strategic agreement signed between the Sri Lankan and Iranian governments to use tea exports as a method of settling the debt, the Ministry of Agriculture and Plantation Industries said in a statement.
 
The payments arrears for fuel imports were accumulated over several years due to various economic challenges including the COVID-19 pandemic’s severe impact on the economy, European sanctions imposed since 2011, the collapse of the tourism industry following the Easter attacks, and the overall economic downturn, which led to a shortage of dollars hindering the payment process, the statement added.
 
Sri Lanka Tea Board Chairman Niraj De Mel confirmed that as of July 15, USD 60 million of these due payments have been settled through tea exports. The chairman also highlighted a significant increase in the volume of tea exported to Iran, which has tripled recently, assisting in the settlement of the debt.
 
He further explained that the first five months of 2024 have seen 4.98 million kilograms of tea exported to Iran, compared to 1.85 million kilograms in the same period in 2023.
 
The agreement not only alleviates Sri Lanka’s financial burden but also strengthens trade ties between the two nations, the ministry highlighted, adding that it exemplifies how creative economic solutions can address financial challenges and enhance bilateral relations.