By:Staff WriterColombo (LNW): Small and medium sector of the tourism industry is demanding a fresh and longer term moratorium insisting that proper recovery remains elusive, hence debt burden crippling its survival.
Following triple blows starting from the 2019 Easter Sunday terror attacks, COVID -19 pandemic and political-economic crisis, the tourism industry was given a 4 year moratorium for debt repayment.
However, tourism sector SMEs complain that the accumulated capital and interest payable, during this period, was arranged into two separate loans by the lending Institutions.
“This resulted in the total accumulated amount exceeding the capital obtained, at the initial stage, even after paying several instalments up to the Easter attack,” they said.
The banks had called upon the beneficiaries of the Moratorium to commence the settlement of the full accumulated debt and the interest, within 60 months.
“We are not even in a position to earn sufficient dollars to cover the monthly bank commitments, given the period is only 60 months.
This is not feasible for SMEs due to the short period of time for settlement and its adverse effect on the cash flow of the companies concerned,” the SME sector pointed out.
They pointed out over 300 parate executions from January to June and more than 500 new parate actions by banks in the last 3 months.
The total sum borrowed by the SME sector is approximately $ 250 million (over Rs. 80 billion) whilst if the large scale category included it is over Rs. 500 billion.
The SME sector is recommending that banks should consider rescheduling the loans for at least 10 years and the interest that is accumulated during the moratorium should be waived off.
It was stressed that the SMEs contribute immensely to the economic and social development of Sri Lankans, and the geographic areas in which they live.
The Industry contributes to the generation of employment opportunities, directly in the hotels and indirectly with the supply chain and small businesses around the hotels, catering to the needs of the tourists.
Collectively, these economic activities contribute to enhancing the buying power of the people and the economic growth of the respective areas.
SME firms said the expected full recovery of the tourism sector in 2024, is bound to generate much needed foreign currency to the country.
Sri Lanka received $ 4.3 billion in 2018, with the highest recorded tourist arrivals of 2.4 million with a total employment of approximately 400,000. If Sri Lanka performs equally well in the near future, the industry should sustain during difficult times, they opined.
“This will prevent charging interest on interest or give a relief on part of the interest instead of penalising the very sector that needs to be safeguarded.
Banks should agree to the repayment proposals given by the hotels as this proposal has been given considering the current cash flows of the properties considering the current market conditions,” they pointed out.