Loss from VAT, NBT to reach Rs.26bn by year end: CBSL

In an assessment of the damage caused to the economy as a result of the Easter Sunday attacks, the Central Bank of Sri Lanka (CBSL) put the revenue loss from VAT and NBT alone at approximately Rs.26 billion for the remaining period of the year. The CBSL said pending economic activities would slacken thereby affecting revenue collection.

In an internal, classified document which Daily Mirror has seen, the CBSL said tourism that cushioned the negative impact of the trade deficit of the balance of payment would be hit hard. “For instance, there was an exodus of tourists out of Sri Lanka recording an unprecedented number of departures at 16,127 on April 21 and 22, as against the arrivals before the bombings on April 20 and 21 at 11,210.Tourist arrivals have been reducing steeply while departures increasing. The terror attacks occurred at a time when Sri Lankan tourism was at a critical juncture of evolution.the potential of the tourism sector to grow to be a vibrant and sustainable industry that contributes to the GDP while creating longlasting career opportunities will be severely affected,” the report said.

The potential reduction in tourist arrivals will have an impact on the return on investment (ROI) of the large investments in the industry which will have an impact of loan repayment capacity of the investors. The possible reduction in hotel occupancy will also have an impact on direct and indirect employment. In general, the trend is such that tourist arrivals in the months of May and June are lower. Therefore, it is likely that earnings in the tourism sector will plummet significantly. On foreign direct investment (FDI), the CBSL said prospective investors who had been positively considering Sri Lanka as a potential investment destination may reassess their stance which in turn might potentially delay inward FDI. For instance, the Silver Park Refinery Project approved to be set up at Mirijjawila Zone in Hambantota of which the lease agreement was scheduled to be signed on April 24 had been postponed.