July 16, Colombo (LNW): The Sri Lanka Tea Board has revealed that $60 million of the $251 million owed to Iran for fuel imports since 2011 has been repaid through tea exports.
This follows a strategic agreement between the Sri Lankan and Iranian governments to use tea exports as a debt settlement method, the Ministry of Agriculture and Plantation Industries said.
The fuel payment arrears accumulated over several years due to various economic challenges, including the severe impact of the COVID-19 pandemic, European sanctions imposed since 2011, the collapse of the tourism industry after the Easter attacks, and a general economic downturn.
These factors led to a dollar shortage, hindering the payment process, the statement added.
Sri Lanka Tea Board Chairman Niraj De Mel confirmed that as of 15th July, $60 million of the outstanding payments had been settled through tea exports.
He also noted a significant increase in the volume of tea exported to Iran, which has tripled recently, aiding in the debt settlement.
De Mel further explained that the first five months of 2024 saw 4.98 million kilograms of tea exported to Iran, compared to 1.85 million kilograms in the same period in 2023.
The agreement not only reduces Sri Lanka’s financial burden but also strengthens trade relations between the two countries.
The ministry highlighted that this exemplifies how innovative economic solutions can address financial challenges and enhance bilateral ties.
