Iran has agreed to import tea from Sri Lanka to settle an old debt owed by the country for imports of oil from Iran.
Iran’s deputy trade minister Alireza Peymanpak said on Wednesday that he had reached good agreements on the issue during a trip to Sri Lanka earlier this week.
Peymanpak said that the barter system will allow the settlement of around $250 million owed by Sri Lanka to Iran for oil imports that date back to nearly a decade ago.
“Fortunately we reached a written solution to return this money and its interest in the form of goods like tea,” said the official.
Reports from Sri Lanka said that the tea barter agreement had been signed between Peymanpak and, Sri Lanka’s Minister of Plantation Ramesh Pathirana.
The report said that Sri Lanka’s Treasury will release $5 million equivalent in rupees each month for payment to tea exporters to Iran under the agreement.
The deal allows the country to get round the US sanctions on Iran and pay its debt to the country while helping tea exports to Iran to return to its peaks of over 38 million kilograms per year.
Iran’s embassy in Sri Lanka said that the agreement will allow Tehran to reduce its massive tea import bill from other countries like India.
Iran has used similar barter mechanisms to maintain trade ties with other countries amid sanctions imposed by the US which has affected Tehran’s access to normal banking and financial services.