Sri Lanka exports tea to Iran in exchange for oil

Iranian officials have signed an agreement with Sri Lanka under which the South Asian country will be able to pay off its (oil) debts to Iran through tea exports, according to a report published by Forbes magazine.

Iranian Deputy Trade Minister Alireza Bimanpak signed a memorandum of understanding on the aforementioned proposal with Sri Lankan Farm Industries Minister Naveen Dissanayake earlier this week in the Sri Lankan capital Colombo.

Sri Lanka’s Ceylon Petroleum Corporation (CPC) reportedly owes about $251 million to Iranian oil imports. As part of the deal, the Sri Lankan Ministry of Finance is expected to pay about $5 million per month to tea exporters.

According to the Forbes report, the mentioned barter deal revives a tactic that Iran has often used in the past to try to circumvent international sanctions.

This deal is also beneficial for Sri Lanka, which suffered from the collapse of the tourism industry during the Covid pandemic and is suffering from a debt and foreign exchange crisis.

Officials with the Sri Lanka Tea Trade Council previously floated the idea of ​​a tea-debt swap in 2018, with a plan for CPC (Ceylon Petroleum Corporation) to pay the country’s tea producers for any exports to Iran.

Iranian oil is usually replaced with consumer or agricultural products.

And earlier this year, there was speculation about a possible swap deal between Tehran and Beijing that would include Iranian oil and Chinese J-10C fighter jets.

Discussions and reports about potential barter deals come to light when Iran feels it is under international pressure.