Two countries exchange tea for oil to avoid the US dollar tea | oil | two countries
According to Reuters, a Sri Lankan official said on the 23rd that Sri Lanka will begin barter trade with Iran using tea next month to offset the $250 million owed for oil. This country, which has been hit by the economic crisis, is trying to increase sales to the Iranian market and protect its foreign exchange reserves.
Last year, Sri Lanka experienced an unprecedented shortage of dollars and dragged its economy into the most severe crisis in decades.
According to the report, the Chairman of Sri Lanka's Tea Bureau, Niraj Mel, said, "This is very timely for us because we can enter an important market. Iran and Sri Lanka can trade without relying on the US dollar."
Mel said, "The requirement of the agreement is to deliver tea worth $5 million per month to the other party for 48 months, but we plan to start with delivering approximately $2 million worth of tea per month."
Government data shows that globally renowned Ceylon tea is Sri Lanka's most profitable export commodity. Last year, we earned 1.25 billion US dollars for this country with a shortage of foreign exchange.
According to reports, Iran has always been one of the main buyers of Sri Lankan tea, but with the impact of US sanctions on Iran, Iran's imports of Sri Lankan tea have decreased from $128 million in 2018 to $70 million last year.
According to this barter trade plan, the state-owned Ceylon Oil Company, which purchases oil, will pay rupees to the local tea bureau and transport tea through Sri Lankan exporters.
Mel said that Iranian tea importers will pay Riyals to the Iranian National Oil Company, which sells oil.