In a first-of-its-kind barter deal, Iran has agreed to accept payment from Sri Lanka in the form of Ceylon tea to clear a debt for part oil exports worth $251 million.
On Wednesday, Sri Lanka's Plantations Minister Ramesh Pathirana told Reuters he aimed to start sending tea to Iran from January. "We hope to send $5 million worth of tea each month to repay Iran for oil purchases pending since the last four years," he said.
He stressed that the arrangement will not violate US-led sanctions imposed on Iran, as tea which falls under food items, are exempt and that no black-listed Iranian banks would be involved.
The agreement signed by Pathirana and the head of Iran's Trade Promotion Organization, Alireza Peyman-Pak, comes amid the island nation's dwindling foreign reserves, said to be $1.6 billion at the end of last month.
Confirming the deal on Thursday, Peyman-Pak said that "in recent negotiations, we reached a written deal to reimburse Iran's debt and interest on it in the form of a monthly shipment of tea produced in Sri Lanka."
Sri Lanka produces about 340 million kg of tea annually, employing around 5 per cent of the population in the billion-dollar industry, most of them women.
Tea which is widely seen as an Iranian staple and the country has one of the highest rates per capita of tea consumption in the world.