Govt. announces relief package for struggling tourism industry

From left: Finance Ministry Secretary Dr. R.H.S. Samaratunga, Acting Finance Minister Eran Wickramaratne and Tourism Development, Wildlife and Christian Religious Affairs Minister John Amaratunga
Pic by Samantha Perera 

• One-year moratorium period on loans obtained by SLTDA-registered tourism sector establishments and their employees
• Fresh working capital loans with two-year repayment period for working capital requirements under Enterprise Sri Lanka
• Reduction in VAT on hotels and tour operators to 5 percent from 15 percent up to March 31, 2020

By Nishel Fernando 

Finance Ministry yesterday announced the much anticipated financial relief package to the country’s troubled tourism industry, which included a one-year moratorium on loans, subsidized credit and 10 percent reduction in Value Added Tax (VAT).

Acting Finance Minister Eran Wickramaratne termed the financial relief package as “rational” pointing out that the government has addressed key demands of the tourism sector to continue with their business plans in the aftermath of Easter Sunday attacks. 

The one-year moratorium will be valid until March 31, 2020 and will apply to both capital and interest payments of loans granted to the tourism sector as of 
April 18, 2019.

However, only Sri Lanka Tourism Development Authority (SLTDA)-registered tourist establishments and their employees will be entitled for this facility.   
Once the moratorium period is over, the capital and interest payments falling in the period would be converted into a term loan and would be recovered from July next year at a concessionary rate.

Addressing a press conference yesterday at the Finance Ministry, Wickramaratne said the Central Bank is in the process of issuing a directive to banks in this regard and the moratorium will be considered by banks on a case-by-case basis.

However, the tourist industry has requested a two-year moratorium with an interest waiver for 6-12 months. 

According to the Finance Ministry, the banking sector’s total exposure to the tourism sector is estimated at Rs.280 billion. 

Wickramaratne also announced that the tourism sector can obtain fresh working capital under the ‘Enterprise Sri Lanka’ programme at a 3.4 percent concessionary interest rate with a repayment period of two years.

He noted that the government will provide 75 percent interest subsidy by allocating Rs. 1.5 billion.