Thursday, June 1, 2023

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Tourism income in May drops by half deepening country’s forex crisis

Foreign exchange income from tourism, the largest services inflow to Sri Lanka after remittances, more than halved in May as the island nation’s economic crisis and the resultant social unrest appears to be getting worse, Sri Tourism Development Board sources said.

As a result, the industry which began the year with hopes to make the most from the pent-up travel demand after the pandemic, is now bracing for yet another challenging year.

Industry stakeholders are making up their minds for about a billion dollars worth of income in 2022, less than a third of what the industry was forecasting to achieve at the start of the year.

According to the earnings data published by the Central Bank, the industry saw its earnings plunging to US$ 54.3 million in May, less than half of US$ 113.3 million earned in April and less than a third from US$ 191.5 million earned in March.

The decline in earnings in May was in lockstep with the decline in arrivals which also halved to 30,207 from April and plunged 72 percent from March levels as travel advisories were issued by several top sourcing markets in May.

With May’s earnings, the cumulative earnings from the trade in the first five months stood at US$ 680.7 million.

Sri Lanka’s tourism industry was off to a fine start with stakeholders expecting to attract over two million tourists and bringing in US$ 4.5 billion in earnings in 2022.

However, the collapse of the Sri Lankan economy by the latter part of March and the resultant shortages and social unrest kept visitors at bay.Now the industry is aiming at just about a billion dollars in the year at the most.

“Even in this calendar year, if we all work together, there is a strong possibility that tourism can contribute close to a billion dollars to meet the country’s need of foreign exchange for essentials and other requirements,” stated Hiran Cooray, the Chairman of Jetwing Symphony PLC, which runs a portfolio of resorts and a city hotel, in his annual letter to shareholders.

The industry also awaits the extension of the debt moratorium on their loans by a further six months through December 31, 2022 as the last leg of the payment holidays comes to an end on June 30 in order to stay afloat.

While the Cabinet has granted its approval for an extension in the payment holiday for the sector, the industry awaits official instructions from the Central Bank this week with specifics on how the concessions would be deployed.

The tourism industry has been under payment holidays since the Easter Sunday attacks in April 2019, as its recovery thereafter was twice beset by pandemic-induced lockdowns and border closures in 2020 and 2021 and, then by the economic crisis in 2022.

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