Hoteliers request govt. to underwrite working capital loans

• Value of working capital loans of tourism industry estimated at Rs.12bn
• Say most private and some State banks reluctant to lend to SME sector
• Urge govt. to expedite ADB-funded credit guarantee scheme 
• Tourism earned US$ 4.5bn last year; was targeting US $ 5bn this year

Sri Lanka’s hoteliers have urged the government to underwrite working capital loans on top of the one-year moratorium given on tourism sector loans as “no immediate turnaround is in sight” for the industry in the aftermath of the Easter Sunday attacks. 
According to a statement by The Hotels Association of Sri Lanka (THASL), the value of working capital loans of the tourism industry to meet monthly salaries, employee benefits and utilities for a period of one-year is estimated at Rs.12 billion.
THASL said most private banks and some State banks are reluctant to risk capital payment of these loans specially to the small and medium enterprise (SME) sector. 
“We are one of the highest tax paying industries in the country. One of the unique features of our industry is that people at every strata of the society can benefit from tourism and they have the opportunity to earn dollars. We were on the path for record earnings this year,” THASL President Sanath Ukwatte said.   
“However, today we are faced with this crisis due to a breach of security which we had no control over. Hotels were directly targeted and to erase that fear of security from the international traveler will take time. Traveler safety and security is a 
significant consideration. 
“We need to look at stabilizing livelihoods of hundreds of thousands of people whose only source of income is tourism. Their service charge which at times is more than the salary is nonexistent today. We urge the government to grant us this facility without any further delay,” he added. 
Last year the tourism industry earned US$ 4.5 billion to the country’s coffers providing over 500,000 employments both direct and indirect. With an average household of four it sums to two million dependents. 
According to the Central Bank, the tourism industry is the second highest contributor of net foreign exchange earnings to the country, just below worker remittances, and its contribution to the national economy is around 6.6 percent 
of the GDP. 
Tourism in Sri Lanka is mainly private sector-owned with substantial capital investments by both local and foreign investors. The industry has created a large number of job opportunities for youth and women across the country. 
The industry was performing well and it was on the path to reaching the US$5billion mark this year. Ukwatte noted that Easter Sunday’s terrorist attacks halted this growth, and recovery would depend on how well the industry manages the international PR from now. 
“The government has access to multilateral funding agencies, which are looking at our industry very sympathetically. These agencies can support the country at a critical time like this. Our industry consists largely of small and medium enterprises. Most of their businesses are making operational losses today,” he said.  
“We also understand that the ADB-funded credit guarantee scheme is yet to be finalized. If the government can take steps to expedite this, then it will take a lot of pressure especially off the 
SME sector. 
“Since, this capital guarantee scheme offers concessionary terms with grace periods and longer payback terms, these companies will be able to have access to working capital on easy payment terms, and will be able to service the loans once the business picks up. This is critical for the industry at this hour,” Ukwatte added.