Sri Lanka settles $60 Million of Iran fuel debt with tea exports

Sri Lanka has paid USD 60 million of its USD 251 million debt to Iran for fuel imports since 2011 through tea exports, announced the Sri Lanka Tea Board.

This initiative is part of a strategic agreement between the Sri Lankan and Iranian governments to use tea exports to settle the debt, according to the Ministry of Agriculture and Plantation Industries.

The debt accumulated due to various economic challenges, including the severe impact of the COVID-19 pandemic, European sanctions since 2011, the collapse of tourism after the Easter attacks, and a general economic downturn, which led to a shortage of dollars for payments.

Sri Lanka Tea Board Chairman Niraj De Mel confirmed that by July 15, USD 60 million of the debt had been paid through tea exports.

He noted a significant increase in tea exports to Iran, which have recently tripled. In the first five months of 2024, 4.98 million kilograms of tea were exported to Iran, compared to 1.85 million kilograms in the same period in 2023.

The agreement not only eases Sri Lanka’s financial burden but also strengthens trade ties with Iran. The ministry emphasized that this deal exemplifies how creative economic solutions can address financial challenges and enhance bilateral relations.