ECONOMYNEXT.com – Sri Lanka will give a one year debt moratorium and subsidized working capital for the tourism sector, State Minister for Finance Eran Wickremeratne said.
“This has to happen with discussion with banks and the Central Bank is issuing regulations as we speak,” Wickremeratne said Tuesday.
The working capital debt and interest will be treated as separate loans to be repaid from July 2020. Working capital loans will be based on revenue of hotels.
The banking sector’s exposure to tourism (such as loans to hotels) was about 280 billion rupees, Wickremeratne said. However, not all of these loans will be rescheduled, the moratorium will be on a case-by-case basis, he said. Up to 75 percent of the interest will be subsidized, the state minister said.
Big hotels and smaller operators will be entitled to the debt relief scheme, as will tour operators.More than 500 small businesses which had collectively received loans totaling 15 billion rupees through Enterprise Sri Lanka will also receive these concessions.
A value added tax on hotels will also be reduced to 5 percent from 15 percent. Value added tax collections from tourism amounted to 18 billion rupees in 2018, Wickremeratne said.
Tourist arrivals to Sri Lanka fell 7.5 percent from a year earlier to 166,975 in April amid the Easter Sunday bombings.
The bombings, which targeted three Christian churches and three Colombo hotels, killed over 250 people, including 42 foreigners, and injured over 500, including 37 foreigners.
Sri Lanka Tourism Development Authority Chairman Kishu Gomes has said that tourist arrivals are expected to fall 60 percent in May. He is expecting arrivals to fall 30 percent in 2019, and recover within 13 months or sooner, as long as there are no additional terror attacks.
Sri Lanka is expected to lose 1.5 billion US dollars in revenue from tourism in 2019.