IMF says “decisive policy and security measures” key for tourism to sustain momentum

By Indika Sakalasooriya

While expressing their deepest condolences over the barbaric attack on churchgoers and innocent civilians—mostly tourists—on Easter Sunday, the International Monetary Fund (IMF) yesterday said “decisive policy and security measures” by authorities are critical for the country’s booming tourism sector to bounce back. 

“Initial financial market pressures seem to have been contained in the aftermath of the attacks. 

“Decisive policy and security measures by the authorities will be important, in particular for tourism, which accounts for 5 percent of GDP, to build on the strong performance of recent years,” IMF Sri Lanka Mission Chief Manuela Goretti told Mirror Business in response to an email query. 

Although cancellations haven’t so far reached an alarming level, local hoteliers estimate US $ 1.5 billion revenue loss from the terror attacks that rocked the island nation, which enjoyed peace for almost a decade after the end of a deadly 30-year war with the separatist LTTE.

Sri Lanka, which was ranked as a top country to travel in 2019 by Lonely Planet, attracted 2.3 million tourists to the country last year, and earnings from the industry rose to US $ 4.4 billion. 

Sri Lanka has set a target of three million tourists and US $ 5 billion earnings for this year.

Goretti acknowledged that Sri Lanka under the IMF Extended Fund Facility since mid-2016 had made important progress in reforming its economy, including revamping its tax system, strengthening social safety nets, and transitioning to inflation targeting.

“The 2019 budget approved in early April strikes a good balance between advancing revenue-based fiscal consolidation, which is important to shore up market confidence given Sri Lanka’s high debt and refinancing needs, while making space for macro critical capital and social spending and business-friendly tax measures.

Based on the important progress made to-date and the reform plans under the programme, our Executive Board is expected to consider in mid-May the authorities’ request to complete the fifth review under the arrangement and extend it by one additional year until June 2020. 

This will provide additional time for the authorities to anchor macroeconomic stability and complete their economic reform agenda,” she said.

Meanwhile, IMF Managing Director Christine Lagarde in a Twitter message expressed her condolences over the Easter Sunday terror attacks.

“We are deeply saddened by the horrific attacks in Sri Lanka,  and have offered our deepest condolences to the authorities and to all those who have lost loved ones. The IMF joins the international community in condemning these atrocious acts of terrorism,” she said.