Tea in exchange for oil: Sri Lanka will send Iran 5 million worth of tea to Iran every month
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| Tea in exchange for oil: Sri Lanka will send Iran 5 million worth of tea to Iran every month |
Sri Lanka produces 340 million kilograms of tea annually.
A Sri Lankan government minister says his country will pay for tea imported from Iran with its own tea.
Ramesh Pathirana says Sri Lanka will pay 5 million a month to Iran to pay off its 25 251 million debt.
Sri Lanka is currently facing a severe crisis in terms of external debt and foreign exchange reserves. Outbreaks of the corona virus have exacerbated the country's economic woes, with a sharp drop in tourism revenues.
A member of Sri Lanka's Tea Board says this is the first time in the country's history that a foreign loan has been repaid in exchange for tea.
Ramesh Pathirana says that this method of repaying the loan will not violate UN or US sanctions on Iran as tea is one of the items which falls under the category of human welfare and in this case no one It does not include an Iranian bank that has been blacklisted.
"We will export 5 million worth of tea to Iran every month to pay for oil purchased from Iran, which has been delayed for the past four years," he told Reuters.
The Sri Lankan Ministry of Agriculture says the proposed scheme will benefit Sri Lanka in terms of exchange as the Iranian loan will be repaid in Sri Lankan rupees through the sale of saloon tea.
This means that the Sri Lankan government will buy tea from tea companies and send it to Iran.
However, Roshan Raj Dorai, a spokesman for the Tea Association, described the payment method as "temporary and unsatisfactory"
"It will not benefit the exporter as we will have to pay in rupees. This is a deviation from the free market and we will not get much benefit from it.
According to media reports, Sri Lanka has to repay 4.5 billion in loans next year. In January alone, the International Sovereign Bond has to pay 500 500 million.
By the end of November, the country's foreign exchange reserves had dwindled to just 1.6 billion, according to the country's central bank.
Central Bank Governor Ajit Neward Sabral had earlier this month said he was confident the country would "unhindered" repay all its external debt due in 2022.
Sri Lanka produces 340 million kilograms of tea annually. Last year, it exported 265.5 million kilograms of tea, valued at 1. 1.24 billion.
About 5% of Sri Lanka's population is involved in the tea industry, which produces tea leaves in factories by plucking leaves from tea gardens on mountain slopes.
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