The country says it hopes to send Iran $5m worth of tea each month to clear its debt.
Sri Lanka plans to settle a debt for past oil imports from Iran by paying it off in tea, a government minister said.
A member of the country's tea board said it was the first time tea had been bartered to settle foreign debt. The Plantation Ministry said: "The recommended scheme will save Sri Lanka much-needed foreign currency since the settlement to Iran would be made in Sri Lankan rupees through the sale of Ceylon Tea."But a spokesperson for the Planters Association, which includes all the major plantation companies in Sri Lanka, said this mode of transaction was a " plaster solution by the government".
However, the country's foreign reserves dwindled to $1.6bn at the end of November, latest data from the central bank showed.
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