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Tuesday April 23rd, 2024

Crisis-hit Sri Lanka aims for USD800 mln from tourism; India-led revival advised

ECONOMYNEXT -Sri Lanka Tourism Development Authority (SLTDA) expects to attract around 800,000 tourists for the rest of the year, with an estimated revenue of 800 million US dollars with Prime Minister Ranil Wickremesinghe instructing to attract Indian tourists amid a worsening economic crisis.

“The Prime Minister has instructed officials to prepare a plan to attract tourists from India for the next six months,” the Prime Minister’s office said in a statement after a meeting between Wickremesinghe and SLTDA officials.

“He also requested the relevant authorities to make arrangements for the resumption of operations of the Palaly Airport,” it said referring to the airport in the former war zone of Jaffna. Palaly airport is expected to attract Indian tourists into Sri Lanka’s culturally-rich North and East.

Sri Lanka witnessed the arrivals of 378,521 foreign visitors to the island nation in the first five months of this year. The Covid-19 pandemic hit 2021 saw 194,495 tourists for the full year.

The tourism industry started to boom in March this year, but the arrivals hit by economic crisis and protest-led political crisis.

Tourism accounted for 5 percent of the GDP in 2018 with 4 billion US dollar earnings, but  fell in 2019 due to the impact of Easter Sunday attack and later due to the Covid-19 pandemic. It has brought 680.7 million US dollars in the first five months of this year.

Sri Lanka is targeting around 2.5 million tourists by 2025 with an expected revenue of $ 3.5 billion and the Prime Minister urged all stakeholders to formulate long-term plans to attract around 1.5 million high-level tourists.

“The Prime Minister also instructed the relevant stakeholders to engage in youth awareness programs as many employees in the hospitality sector have already left for other locations and the number of new recruits to hotel schools in the country has come down drastically,” the prime minister’s office said.

“The Prime Minister also discussed the possibilities of organizing cultural festivals which will provide a unique opportunity to create new employment opportunities and allow the tourists to immerse themselves in the local cultures.”

Meanwhile, Minister of Tourism Harin Fernando said that he had already held discussions with the diplomatic community to compel the relevant countries to lift the existing tourism restrictions on Sri Lanka. (Colombo/June 14/2022)

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  1. sacre blieu says:

    He continues to lie, and the gas crisis is getting worse Even crimes against women and children have also increased a lot. In the Colombo area, some outer districts have ridden with it, is particular eh Dehiwala/Mt. Lavinia area.

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  1. sacre blieu says:

    He continues to lie, and the gas crisis is getting worse Even crimes against women and children have also increased a lot. In the Colombo area, some outer districts have ridden with it, is particular eh Dehiwala/Mt. Lavinia area.

Sri Lanka single borrower limits cut to 25-pct of bank capital, SOEs also included

ECONOMYNEXT – Sri Lanka’s central bank has issued directions limiting loans to a singe borrower or a group of connected customers to 25 percent of Tier I capital, with state enterprises which turned out to be the biggest borrowers, also included.

In a 2007 direction, banks were allowed to give loans up to 30 percent of capital for a single customer and 33 percent for a group but the rules were widely violated in the case of state enterprises, which were used as off-budget vehicles to give energy and other subsidies.

Banks will have to limit exposures to 25 percent starting from January 2026.

According to transitional provisions published in the direction seems to indicate that some banks may have single borrower exposures of 85 percent or more.

They will be required to bring exposures down to 60 percent by 2027 and 25 percent by 2028.

Download the direction from here Sri-Lanka-single-borrow-limit-direction-2024

Energy utilities were made to borrow from state banks to run off-budget subsidies under plan avoid a price formula during the Rajapaksa regimes.

Sri Lanka’s state banks ended up with large debts to Ceylon Petroleum Corporation partly due to flexible inflation targeting (printing money to cut rates as soon as inflation fall triggering forex shortages) even when fuel was market priced in 2018, analysts have shown.

When rates were cut with inflationary open market operations, triggering forex shortages, CPC was barred from buying dollars and forced to get suppliers’ credit denominated in dollars.

The suppliers’ credits were later converted to dollar loans from state bank loans, usually after the currency collapsed from the inflationary rate cuts or inflationary open market operations to sterilize interventions or both, analysts have shown.

The CPC loans have since been taken over by the government.

Banks have also funded roads and other state projects.

“Licensed banks shall gradually reduce the exposures to Public Corporations to meet the maximum limit,” by December 2030 according to the direction.

“Public corporation shall mean any corporation, board or other body which was or is established by or under any written law other than the Companies Act, with funds or capital wholly or partly provided by the Government.”

Many of the newer state enterprises however have been suddenly set up under the Companies Act, unlike earlier where a specific act was passed by the parliament to set up corporation or a statutory authority.

Borrowings of CPC and CEB eventually hit the financial stability of state banks while actual bad loans were under-reported. Now the bad loans are being covered with a state capital injection.

Under an International Monetary Fund and World Bank backed program, the so-called ‘sovereign bank nexus’ is being severed to protect the banking system.

Government securities, central bank sterilization securities, loans guaranteed by multilateral lenders or high rated foreign banks are excluded. (Colombo/Apr23/2024)

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Sri Lanka exceeds tax revenue target by 6% in first quarter

ECONOMYNEXT – Sri Lanka’s revenue collecting bodies have outperformed and exceeded tax revenue target by 6 percent for the first quarter ended on March 31, State Revenue Minister Ranjith Siyambalapitiya said.

“After many years of difficult challenges, it has been possible to exceed the expected state revenue in the first quarter of 2024,” he said in a statement.

The government expects a revenue collection of 4,106 billion rupees in 2024.

“The reason for the economic crisis in the past period was the reduction in the level of government revenue. Considering the achievement of higher than the target in the first quarter of this year and the revenue pattern, the 2024 will become a year in which the revenue targets can be achieved,” he said.

The three tax revenue collecting bodies – Sri Lankan Customs, Excise Department, and Inland Revenue Department have collected 834 billion Sri Lanka rupees in the first quarter.

“It is a 6% higher than the expected revenue target of 787 billion rupees,” Siyambalapitiya said.

He said the Inland Revenue Department exceeded its target by 13 percent to 430 billion rupees compared to the target of 381 billion rupees in the first quarter of 2024.

He also said Customs Department has managed to reach the target of 353 billion rupees and the Excise Department has also achieved 96% of the revenue requests and earned 51 billion rupees in the first quarter.

The island nation has raised Value Added Tax (VAT), imposed new taxes, and increased personal income taxes to boost the revenue under an International Monetary Fund-backed reforms in return of a $3 billion External Fund Facility.

People have started to grumble over the government’s higher taxes without reducing some of the state expenditures. The government has been in the process to privatize some key state-owned enterprises. However, that process faced delays amid gradually rising protests against the move. (Colombo/April 22/2024)

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Air Asia, SriLanka’s FITS, Hayleys bid for SriLankan Airlines

ECONOMYNEXT – Malaysia’s AirAsia group, FITS Aviattion of Sri Lanka and Hayleys are among bidders for state-run SriLankan Airlines, a statement from the State-owned Enterprises Restructuring Unit said.

Dharshaan Elite Investment Holding (Pvt) Ltd, . Sherisha Technologies Private Limited and Treasure Republic Guardians Limited are the other bidders.

The responses will be evaluated to choose qualified investors.

International Finance Corporation, as Transaction Advisors for the divestiture of SriLankan Airlines Limited, will continue to advise the government, the statement said. (Colombo/April22/2024)

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