Cashed-strapped Sri Lanka has reached an agreement with Iran to settle its outstanding $US250 million ($A347 million) oil debt to the Islamic Republic using tea, Plantation Minister Ramesh Pathirana has announced.
Sri Lanka’s tea exports to Iran have been disrupted since 2012 when the US imposed sanctions on Tehran.
However, Pathirana was keen to emphasise that the new arrangement would not violate international sanctions as tea is exempt due to it being categorised as a food item.
Iran was among the leading importers of Sri Lankan tea until a decade ago, but due to sanctions and payment issues, its exports to Iran have dropped sharply.
Last year Sri Lanka exported just 15 million kilograms of tea, a far cry from the 40 million kilograms it exported to in 2012.
Over the past few months Sri Lanka has been experiencing severe financial difficulties, and is currently battling a foreign exchange crisis.
Its national reserve has dropped to just $US1.6 billion ($A2.2 billion) and the government is having trouble meeting payment for oil and food imports.
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