Debt moratorium looms over tourism industry
Sri Lanka’s tourism industry is bracing for a good winter but the debt moratoriums have come to a screeching halt as the banks feel they will collapse if this continues.
The government is facing a catch-22 situation unable to allow banks to go ahead and obtain the claims and neither give-in to the hotels and as a result the authorities are now considering looking at taking up each on a case by case basis.
Tourism Minister Harin Fernando told the Business Times that they have held discussions with banks and the Central Bank and have come to understand that it is not possible to continue this situation.
However they are trying to ensure that firstly they need to “get the country back to normal” only after which tourists will come back here. In this respect, he pointed out that after July 10 there will be a steady supply of fuel.
The minister noted that they were awaiting an urgent cabinet meeting next week and were also requesting banks to consider the extension of loans until the end of the year especially for the SME sector.
Given the current crisis, the government believes that the country will gain more credibility once the International Monetary Fund comes in and the required debt restructuring commences.
Then when the winter season arrives “things will fall into place,” he said adding that they expect to generate another 500,000 tourists to visit the country until the end of this year that will close in on about a million arrivals for this year.
As the authorities are struggling to sustain a direct income generator and avert a further disaster should the banking system collapse; the tourism industry is struggling to make ends meet as occupancies in most hotels are less than 10 per cent and no Sri Lankans are either found to be patronizing due to the current fuel crisis.
But hoteliers remain optimistic, Jetwing Symphony Chairman Hiran Cooray said, “You and I have come to a standstill but tourists are moving around.” If they arrive through a recognised travel agent they will be assured of safe travel around the country, it was noted adding that they are committed to earning US$1 billion in the next six months.
He explained that carrying out promotions is of value to the country as that would help in generating travellers to the destination required for the next few months.
Hotels Association President M. Shanthikumar said that they are still awaiting the extension on the debt moratoriums as no direction has yet been given to either private or state banks.
“We are at a loss since the tourism industry can’t start making payments by July and we are struggling to get money to pay salaries and at the same time we can’t service the banks,” he noted.
In the absence of a moratorium at least 70-80 per cent of the SMEs will shut down and along with dependents about 1 million people will be out on the streets, Mr. Shanthikumar said.
Commenting on the need for tourism promotion, he pointed out that as a private sector that has heavy investments there is a need for promotions. The industry has planned a 4- day roadshow in India starting on July 11.