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No interest waiver for tourism? 

16 Jan 2022

Despite sustained lobbying by the tourism sector for an interest waiver on all tourism-related debt for a period of three years from April 2019 to April 2022, the Ministry of Tourism is unable to grant this request as it cannot intervene in this matter, The Sunday Morning Business learns.  Speaking to The Sunday Morning Business, a senior official from the Ministry of Tourism who wished to remain anonymous questioned how the Ministry could intervene in a matter of waiving interest rates when licensed commercial banks were entities conducting business just like others.  “How can we intervene? It’s a bank matter and these are commercial entities. They are also doing business. We intervened to give a moratorium and we can’t ask for this in addition to that,” the senior official explained.  Continuous attempts to reach Tourism Minister Prasanna Ranatunga on 13 January proved futile. The Central Bank of Sri Lanka (CBSL) extended the debt moratorium by nine months from 1 October 2021 until 30 June 2022. The initial moratorium was issued by the CBSL in April 2019 upon consideration of the Easter Sunday attacks.  According to the latest directive of the CBSL, licensed banks can convert the capital and interest falling due during the moratorium period commencing from 1 October 2021 to 30 June 2022 into a term loan. Banks can amalgamate the capital and interest falling due during the previous moratorium granted, with amounts falling due from 1 October 2021 to 30 June 2022.  Nevertheless, as the extension of the debt moratorium is not sufficient for the recovery of the tourism industry, tourism sector stakeholders insisted and proposed on having a long-term solution that could eventually support the industry.  The Hotels Association of Sri Lanka (THASL) former President Sanath Ukwatte told The Sunday Morning Business that the association keeps requesting an interest waiver for a period of three years from the officials in charge, but the Government has remained silent to date.  “We have asked them to restructure our loans from 2019. The request was that we would pay the capital back with a two-year grace period and eight years of payback period on the capital at an interest rate of 4%,” Ukwatte said.  In September 2021, Ukwatte told The Sunday Morning Business: “Debt moratorium is a temporary solution that is just postponing your troubles. Hence, as an ultimate solution, we have requested the Government to intervene to waive our interest rate for a period of three years and to help the industry to restructure our loan processes.” Meanwhile, during the same period, the Sri Lanka Association of Inbound Tour Operators (SLAITO) had proposed a different solution to the Government.  Speaking to The Sunday Morning Business, former SLAITO President Mahen Kariyawasam stated that moratoriums were a short-term measure as it required paying interest on interest, thereby impacting the sustainability of the industry even after tourism recovers during 2022.  “For our industry to pay back the accumulated loan with interest on interest will take time; therefore, we have been requesting for a long-term measure such as obtaining a credit line with an eight year repayment period from the World Bank via the United Nations Development Programme (UNDP). However, the proposal was not approved by the Tourism Board (Sri Lanka Tourism),” Kariyawasam said.  He stated that SLAITO was still hoping to obtain the credit line from an international body with a lower interest rate, as they were only requesting this to gain enough time to recover, earn enough money, and pay back with a satisfactory timeline of an eight-year repayment period, including a two-year grace period.  The tourism sector is among the top three foreign exchange earning sources of Sri Lanka. Even before the closure of the airport to mitigate the spread of the virus, the country was struggling to attract tourists in the early weeks of this year, mainly due to stringent travel restrictions imposed in China, which is among the top five tourism-generating markets of Sri Lanka.  (YD)


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