- Requests 2-yr moratorium and interest waiver on all tourism loans and overdrafts
- Seeks interest-free working capital loans with lengthy repayment periods to pay employees
- Fears mass-scale unemployment and a multiplier effect across economy
- Asks govt. to encourage CB to further reduce policy interest rates
The Hotels Association of Sri Lanka (THASL) is seeking a two-year moratorium and an interest waiver on all loans and overdrafts taken by tourism businesses from banks and non-bank financial institutions, with effect from April 1, 2020, as COVID-19 takes a heavy toll on the already battered industry.
“This is by far the biggest crisis we have ever seen in our sector. The closure of airports and the worldwide travel restrictions have effectively shut down the tourism industry.
The impending collapse of the industry, specially after these two major setbacks, including the 2019 Easter Sunday attacks, will likely lead to mass-scale unemployment and have a multiplier effect on the rest of the economy,” THASL cautioned the government.
While welcoming the six-month loan moratorium announced by President Gotabaya Rajapaksa for all businesses to mitigate the economic impacts of the coronavirus on Tuesday, THASL stressed that “the twice-battered tourism industry” needs a far-reaching fiscal recovery package immediately.
Accordingly, THASL is seeking the announced moratorium for capital repayment of all loans and overdrafts taken by the tourism businesses from banks and leasing companies to be extended for a period of two years, with effect from April 1, with a complete waiver of interest payments during the period.
Further, it also sought interest-free loans with lengthy repayment periods to meet the working capital needs of tourism businesses, to fund the employees’ salaries and maintain the hotel properties for at least the next six months, amid revenue levels reaching zero.
“THASL strongly emphasises the urgency of these measures, which will help to curtail significantly the negative consequences of the current crisis, with the revenue levels of its members reaching zero. Any delay will fraught with peril, for the employment situation in particular and for the economy in all aspects,” THASL said.
The association also requested the government to encourage the Monetary Board of the Central Bank to further reduce interest rates to create a greater stimulus for growth and investment, which would assist the tourism industry to emerge from the current crisis.
The tourism industry accounts for about 6 percent of Sri Lanka’s gross domestic product (GDP).
“The COVID-19 pandemic has led to a major contraction in both supply and consumer demand. The fall in oil prices, together with the decline in consumer goods imports, should create less pressure on Sri Lanka’s balance of payments. This is likely to create a deflationary environment in the economy and open up space for a more flexible monetary policy,” a THASL statement pointed out.
In 2018, prior to the Easter attacks on churches and hotels, the tourism industry earned US $ 4.5 billion for the country and in 2019, the industry was well on the path of recovery and earned US $ 3.5 billion.
“Irrespective of geographical regions, this pandemic has affected the entire world and the tourism industry is the worst hit,” the THASL statement added.
According to a recent statement by the World Travel and Tourism Council, the employment in the tourism industry, which accounts for 10 percent of the world’s GDP, is severely impacted by the COVID-19 pandemic and Asia is expected to be the worst affected.