Sri Lanka close to oil-for-tea barter deal with Iran

ECONOMYNEXT – Sri Lanka is close to reaching a barter deal with Iran to set off payments for  shipments of its main agricultural export, Ceylon tea, against money due for oil imports, Plantation Industries Minister Navin Dissanayake said.

“Our tea market is getting affected because of U.S. trade sanctions on Iran,” he told a news conference. 
 
The problem arose because of trade sanctions imposed by the United States on Iran, which  although not covering food, disrupted payments in US dollars as banks feared getting blacklisted  for transactions involving Iran. 
 
The Tea Board was holding talks with the state oil refiner, Ceylon Petroleum Corporation, which  owes Iran 240 million US dollars for oil imports. 
 
“We are hoping to go for a barter system which Iran also likes in two or three weeks,” Dissanayake said. 
 
He calculated that at 10 million dollars a month, Sri Lankan exporters will be able to ship tea to Iran for 24 months under the barter deal, while reducing the CPC’s arrears.
 
Sri Lanka’s total tea export earnings in 2018 were 1.43 billion US dollars, down from 1.53 billion US dollars in 2017, with shipments to Iran down by almost four million kilos to 24 million kilos, (COLOMBO, 18 July, 2019)