Thread by @shiharaneez

#BREAKING - #Iran, #SriLanka sign tea for oil payment deal. Sri Lanka owes $251 million for National Iranian Oil Company for crude import before US #Sanctions. Now both countries sign MOU to settle it by means of utilizing $251 mln to facilitate the export of Ceylon Tea

Facing both economic crisis and dollar shortage, Sri Lanka's deal with Iran is expected to help ease its pressure on the looming balance-of-payment crisis.

#SriLanka says: "This scheme will not violate any UN or US sanctions since tea has been categorized as a food item under humanitarian grounds while none of the black listed Iranian Banks will be involved in the equation."

#SriLanka:"Further, the recommended scheme will save SriLanka much needed foreign currency since the settlement to Iran would be made in Sri Lankan rupees through the sale of Ceylon Tea." Also says the deal won't generate foreign currency as tea exporters will be paid in rupees

The MoU was signed by Ramesh Pathirana, Minister Plantation of Sri Lanka and Alireza
The #CeylonTea's market share of around 47% in 2016 dropped to 25% in 2020 due to the economic sanctions resulting in banking restrictions, payment problems and depreciation of Iranian Riyal.

Ceylon Tea export to Iran has dropped to 14.73 million kilograms in 2020 from a peak of 38.42 million in 2013.
Sri Lanka says: "The additional US sanctions on Iran are creating further impediments for Sri Lanka to export tea to that destination."

Iran has been in discussion with Sri Lankan governments for a barter system - exchanging only goods and services without involving US dollars - as a move to evade US sanctions.

#SriLanka's Plantation Ministry said the proposed scheme is to seek the possibilities of operationalizing a mechanism to settle the long outstanding debt of 251 million US dollars.

#SriLanka: "Since the Iranian authorities have been repeatedly highlighting the importance of the early settlement of the debt, this scheme will enable the Ministry of Finance to make the settlement in local currency through trenches of USD 5 million equivalents"