CBSL Governor snubs tourism industry calls for moratorium

• Opines moratoria are not the solution for tourism but recovery via promotion of luring more tourists
• Stresses even after successive moratoria if tourism sector has not been able to recover CBSL can’t ask banks to extend debt moratorium anymore
• CBSL Chief’s reluctance comes after President Wickremesinghe’s remarks that Govt. will explore possibility of extension 
• The Hotels Association President recently requested Govt. to think ‘out of the box’ as crisis in tourism is unprecedented and SMEs impacted most
• Tourism sector outstanding capital and interest estimated at Rs. 500 b; overall banking sector credit to private sector at Rs. 7,499 b

Central Bank Governor Dr. Nandalal Weerasinghe

The Central Bank Governor Dr. Nandalal Weerasinghe yesterday snubbed calls by the tourism and hotel industry for an extension of the debt moratorium saying that wasn’t the solution. 

Speaking at the launch of Economic Outlook by the Ceylon Chamber of Commerce in which all travel, hotel and tourism industry associations are members, Dr. Weerasinghe said the tourism industry has been enjoying a moratorium for three years and others for two years thereby impacting the banking sector. 

“Moratoriums are not the solution,” CBSL Governor said in an apparent response to tourism industry cries for a much needed extension. Instead, he said, the tourism sector has to rely on recovery based on proper promotion luring more arrivals.

“Even after successive moratoria, if the tourism sector has not been able to recover, we can’t ask banks to extend the debt moratorium anymore. They (banks) have to protect their depositors money,” Dr. Weerasinghe emphasised and reinforced his often stressed remark that “all must share the pain” of the on-going crisis and go through the temporary difficulties. 

However, the CBSL Chief said all banks have been requested to speak to their borrowers and extend help including restructuring of existing loans. 

He pointed to the declaration of inflation and anticipated decline in interest rates as additional factors of relief for tourism and other sectors asking for an extension of the moratorium. 

Outstanding capital and interest of the tourism sector is estimated to be Rs. 500 billion. Banking sector credit to the private sector as at end November 2022 was Rs. 7,499 billion.

The CBSL Governor’s snub comes after President Ranil Wickremesinghe recently said the Government will consider the possibility of extending the tourism sector debt moratorium. 

The Hotels Association President M. Shanthikumar welcomed the stance by President Wickremesinghe as the crisis in the tourism industry is unprecedented and impacted the SMEs most. He stressed that further support was necessary even to serve the influx of tourists to Sri Lanka in recent months and future arrivals. 

THASL Chief requested the Government to think ‘out of the box’. “Be it a financial model to ease the debt, marketing and promotions to increase growth or to come out of the gap we will face with us not having the required staff in the future due to large numbers now seeking jobs overseas and no proper strategy in place to address this, the Government will have to look at new ways to address these issues. 

“All of these are unprecedented in the history of our industry and unless we think afresh, sustaining tourism will be a huge challenge,” Shanthikumar emphasised.

Shanthikumar also noted that if the Sri Lanka Promotions Bureau strategically promotes Sri Lanka with an effective communication campaign during this juncture, tourism without doubt will generate quick foreign exchange returns which will assist the country and all of us in tourism.

According to THASL over 12% of the population are dependent on tourism with over 500,000 direct and indirect employment. The total investment in the tourism sector in Sri Lanka is over $ 20 billion and was the number one net foreign exchange contributor to the country in 2018.

Tourist arrivals in 2022 amounted to 720,000 higher in comparison to COVID-impacted 2021’s 195,000 but far lower than 2.3 million in crisis-free 2018 and 1.9 million in 2019 which saw the ugly Easter Sunday terror attacks.

Earnings from tourism in 2022 were $ 1.13 billion up from $ 507 million in 2021 but lower in comparison to $ 4.4 billion in 2018.