Tourism industry renews call for moratorium extension

„■ Urges CB to act on the Cabinet decision taken earlier this month to extend industry loan moratorium ■ „Reiterates need for urgent breathing space to stay afloat; Moratorium offered by State banks scheduled to end on June 30

■ „Says longer the delay to provide loan relief, the more the sector will bleed „■ Industry’s estimated debt including accumulated interest estimated to be over Rs.500bn

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Sri Lanka’s tourism industry stakeholders yesterday warned that the industry is likely to further crumble if relevant authorities continue to delay in extending the necessary intervention.

The Hotels Association of Sri Lanka (THASL), Sri Lanka Association of Inbound Tour Operators (SLAITO), and the Association of Small and Medium Enterprises (ASMET) reiterated the need for the Central Bank to act on the Cabinet decision on providing breathing space for the industry’s loan repayments.

The representatives asserted the longer the Central Bank takes to facilitate the extension of the loan moratorium, the more the sector will bleed.

“The next six months is crucial for us. To revive we need to sustain and for that it is imperative to have the moratorium extended. The sector players are struggling to pay salaries and suppliers to stay afloat due to

the drop in tourist arrivals. The delay in providing the relief is hitting us hard,” said THASL Past President Hiran Cooray addressing a joint press conference yesterday.

He cautioned that hotels have already downsized operations and the increasing difficulties will compel a significant proportion of the formal tourism sector to close operations in the near future.

Halting operations in the tourism sector would mean loss of foreign currency earnings which the economy is in dire need to come out of the current crisis situation.

Earlier this month (June 8), the Cabinet gave the nod to extend the moratorium given to the crisis-hit tourism industry until December 31 of this year. The approval was made after industry stakeholders repeatedly asserted the need for more time for loan paybacks.

However, it has been 20 days since the decision was made, but the Central Bank is yet to take the necessary steps to provide the relief.

The moratorium granted by private sector banks on loans taken by the tourism industry expired on March 31, and the moratorium granted by State banks on tourism industry loans will expires on June 30.

The industry’s estimated debt including the accumulated interest is estimated to be over Rs. 500 billion.

“With no revenues, how can any member pay back debt from the end of this month? It is impossible. The loans are bound to default. The scaling down would lead to large scale job losses. We will not be able to return to normalcy even if tourists are willing to visit Sri Lanka once again,” said THASL President M. Shanthikumar.

The stakeholders shared that while the Asian Development Bank (ADB) has agreed to provide financial support to the sector, the effort will only be rolled out after the government has sealed an agreement with the International Monetary Fund (IMF).

The sector stakeholders urged the Central Bank to expedite the necessary steps to extend the moratorium for the next six months until they are able to work on a constructive debt restructuring programme with one of the donor agencies.

The stakeholders expressed confidence in the tourism sector bouncing back, only if the government is able to provide support when it is needed the most.

“We have a target of achieving US$ 1 billion by the end of the year. We have been in this business of tourism for many years, we know best the potential it has to generate foreign currency and we know how to get it moving,” stressed SLAITO Past President Nilmin Nanayakkara.