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Sri Lanka extends Rs300mn SME loan to tourism sector

Tourism is the third highest source of foreign exchange for Sri Lanka, but the industry has faced a downturn following the Easter Sunday terror attacks.

ECONOMYNEXT – Sri Lanka will ask banks to extend new loans of up to 300 million rupee for small and medium scale (SME) businesses to the tourism sector as well, the government information department said.

Sri Lanka’s Industrial Export, Investment Promotion and Civil Aviation Minister Prasanna Ranatunga was quoted saying the Easter Sunday attacks had caused major setback to industry in which most of the hotels were in default.

“Entrepreneurs in the tourism sector made an appeal to us to provide give them some relief to revive their business. That is why we decided to extend the 300 million rupees SME loan facility for them as well,” the minster said.

Earlier, a central bank circular said manufacturing, agriculture, services and construction sectors will be able to avail of a debt moratorium and a 300 million rupee loan for credible business plans.

The loans will be for five years, with a one year grace period and at the average weighted prime lending rate, the average rate given to a bank’s top clients.

It is not clear if the tourism industry was not included in the services sector of the central bank circular.

The tourism sector was provided a debt moratorium earlier in 2019 along with working capital loans.

The April Sunday attacks saw Islamist extremists bomb three luxury hotels and three churches, which caused tourist arrivals to drop 18 percent in 2019 from a year earlier.

However, by December the drop had improved to 4.5 percent from a 70.8 percent fall in May.

Sri Lanka has now decided to follow a target-based plan to drive tourism revenue to 10 billion US dollars in 2025 from 4.4 billion rupees in 2018 by cutting out un-necessary regulatory barriers that hinder the expansion of the sector.





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