Tourism sector urges extension of Rs. 500 b debt moratorium

• Industry leaders warn failure or delay would jeopardise sector viability, jobs and livelihoods
• Reveal tourism most impacted by triple setbacks from 2019 April Easter Sunday terror attacks, COVID-19 pandemic and ongoing economic crisis
• Insist extension will incentivise industry to double efforts to maximise prospects in upcoming winter season and target $ 1 b in earnings
• Stress Sri Lanka’s future recovery cannot be envisioned without tourism
• Claims banking sector exposure to tourism debt is an insignificant 5% of total

By Nisthar Cassim

The tourism sector yesterday urged for the extension of the Rs. 500 billion debt moratorium by a further six months till December this year, saying it was critical for the 3 million-dependent industry and to tap prospects for more forex-boosting visitors in the upcoming winter season.

The compelling case for the extension was made jointly by The Hotels Association of Sri Lanka (THASL), the Sri Lanka Association of Inbound Tour Operators (SLAITO) and the Association of Small and Medium Enterprises (ASMET) at a media briefing.

Noting that Cabinet on 7 June had in principle agreed to extend the moratorium which is to expire on 30 June, the Committee appointed to give necessary directions, has not met nor made any recommendations, tourism industry leaders alleged yesterday. With few days remaining there is growing fear that the entire industry will be classified as Non-Performing by the banks and finance companies if the Government fails or delays the confirmation of the extension of the debt moratorium. 

Pix by Ruwan Walpola

Based on end-2020 data, the banking sector’s exposure to the tourism sector is Rs. 330 billion and that of Non-Bank Financial Institutions (NBFIs) is Rs. 21 billion, bringing the total to Rs. 352 billion. The tourism industry’s estimate of Rs. 500 billion is after adding accrued interest and re-pricing of dollar loans following the recent 40% devaluation. 

Tourism sector leaders opined that the banking exposure to tourism sector is only around 5% of its total industry lending hence extension of the debt moratorium will not have a major burden.

Tourism has been most impacted sector by triple setbacks ranging from the 2019 April Easter Sunday terror attacks, COVID-19 pandemic and now the ongoing economic crisis. The industry has been on a debt moratorium for the past three years given its economic importance in terms of foreign exchange earnings, employment and livelihoods.  

“The industry is on the verge of collapse and accommodation and other service providers are on the brink of closure,” warned THASL President and industry veteran M. Shanthikumar. He said successive setbacks have eroded revenue and failure to extend the debt moratorium will result in non-payment of salaries and livelihoods of 500,000 directly employed by the industry. “Extension will ensure tourism draws more dollars which is today worth more than gold,” he added.

Former THASL President and Jetwing Hotels Chairman Hiran Cooray said that tourism has been resilient despite triple setbacks due to Sri Lankan hospitality and the human resources within the industry. “We were recovering post-COVID and recent events have posed fresh challenges. However, with travel warnings lifted or toned down, we are confident of a rebound, especially in the upcoming winter season,” he said, adding that extension of the debt moratorium is critical in the on-going revival process.

“Sri Lanka can bounce back faster with revival in tourism,” emphasised Cooray, adding that if supported, tourism can earn $ 1 billion in 2022 and much higher next year.

THASL Vice President Asoka Hettigoda said the industry request is an extension of the moratorium with a clear recovery plan for the country with tourism as a thrust sector. “Sri Lanka’s future recovery cannot be envisioned without tourism,” he stressed.   

THASL former President Anura Lokuhetti also said despite the ongoing crisis, the industry was confident of tourists returning from August onwards and debt moratorium extension will be a big incentive for the industry to double up the efforts.  

Tourism leaders also said tourists from Western markets have not had a proper winter holiday for the past three years starting from 2019/20 due to the COVID pandemic, and with travel and health restrictions being lifted globally, Sri Lanka stands to gain from the pent-up demand in the upcoming winter season.

THASL Vice President Angeline Ondaatje said if Aeroflot resumes flights Russian market will be active once again and resumption of outbound travel by Chinese will be a big boost. “Sri Lanka is ideally positioned to benefit,” she added.

SLAITO former President Nilmin Nanayakkara said the Government must detach tourism from crisis support and the industry has been prudent despite the crisis as it had not over-borrowed. He too acknowledged that travel trends reflect an uptick and the international community stands ready to support Sri Lanka. 

SLAITO past President Devendra Senarath said the travel trade in Western markets has begun promoting Sri Lanka following the lifting of adverse advisories whilst planned roadshows in India will help lure more tourists.  

ASMET President Rohan Abeywickrema 90% of the tourism industry’s support services is SME-driven and the debt moratorium extension and thereby supporting tourism revival is also in the best interest of the banking sector.