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Monday April 22nd, 2024

Sri Lanka hotels brace for 12-month slump on Covid-19 hit

ECONOMYNEXT – Sri Lanka’s tourism industry is bracing for a year long downturn with the Coronavirus crisis coming on top of a hit from Easter Sunday attacks in April 2019, but there were tentative bookings for next year already, officials said.

Sri Lanka Hotel Association, Chairman, Sanath Ukwatte said two crises coming on top of each other had hit the industry but it had gone trough bad times earlier and somehow recovered.

The government and banks had also given debt moratorium.

“Recovery seems 6, 8 month or maybe a year.” Ukwatte told an online forum organized by Advocata Institute, a Colombo-based think tank.

“We are thankful to the government for coming to our rescue when we asked. They have introduced moratoriums and working capital loans for our industry”

“We need to revive the industry as soon as it is safe to do so. So we need to engage the government and health sector to compromise on how to bring tourist without being a threat to the health of the country.”

Sri Lanka’s tourism development authority said a raft of new regulations to cut risks of tourists and protect staff were being made.

Sri Lanka’s tourism arrivals fell 70 percent in March. On March 19, all arrivals were closed. At the time about 20,000 foreigners were in the country. An estimated 10,000 were still in the country by March.

Sri Lanka Association of Inbound Tour Operators said their employees had taken a salary cut and were finding it difficult to pay value-added taxes, with the deadline coming shortly.

Ukwatte said with the current situation faced by the global tourism industry will take another year to recover.

However, Ukwatte said there were some tentative bookings for 2020.

“We are receiving inquires and attentive bookings from January onwards” Ukwatte said. “Industry is adapting a very flexible policy where a tourist can cancel a booking without any penalty before the arrival.”

Ukwatte said in order to recover from the crisis Sri Lanka Hotel Association will join with the Sri Lanka Tourism Bureau.

“We are planning to work with the SLTB, perhaps plan some early bird offers. We can match our offers with the bank offers. We have to induce the market and people to travel again.”

Ukwatte said even the industry promote offers it should not lower its prices due to the higher operation cost in the country.

“We should not down our prices, we should be very careful with our prices. Because hotels can’t survive with cheap tourism. Our operation cost is higher than in Thailand”.

Ukwatte hoped a vaccine would be found soon to end the pandemic.

“We are hopeful and optimistic. Tourism faced some severe hits in the past years but it has always come back,” Ukwatte said.

Several respiratory pandemics had including SARS ended without any vaccine or so-called herd immunity.

Vietnam was the first country to be declared free of SARS. Both Sri Lanka and Vietnam also completely killed Wave I COVID-19 infections from China and did not contribute to the global pandemic. (Colombo/ April 21/2020-sb)

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IMF official: Sri Lanka’s road ahead is challenging, critical to keep up with reform momentum

ECONOMYNEXT –International Monetary Fund’s First Deputy Managing Director Gita Gopinath said Sri Lanka’s future with many reforms are challenging, but it is critical to keep up with the reform momentum.

Gopinath stated this after meeting the island nation’s State Finance Minister Shehan Semasinghe Central Bank Governor Nandalal Weerasinghe, and Treasury Secretary Mahinda Siriwardena on the sideline of the IMF/World Bank Spring Meetings in Washington.

“I commended them on hard-won economic gains in the past year. The road ahead is challenging and it’s critical to keep up with the reform momentum,” Gopinath wrote on her X platform.

Under IMF programme, President Ranil Wickremesinghe has implemented a raft of hard reforms including higher taxes.

Sri Lanka agreed to the IMF programme after it declared bankruptcy with sovereign debt default in April 2022.

Semasinghe after the meeting tanks Gopinath for acknowledging Sri Lanka’s economic progress.

“Our discussion was insightful and productive, and we appreciate the opportunity to delve into the challenges and opportunities ahead,” the State Finance minister said in his X platform.

“We remain steadfast in our commitment to our reform agenda and eagerly anticipate continued collaboration with the IMF to advance our shared goals.”

Sri Lanka was compelled to go for IMF after the unprecedented economic crisis which was followed by a political crisis that ousted former president Gotabaya Rajapaksa and his government who were legitimately elected.

The IMF programme has included reforms in state-owned enterprises, fiscal sector and financial sectors to ensure debt sustainability.

The global lender also has pledged its support to speed up the island nation’s lingering debt restructuring process with private creditors including sovereign bond holders. (Colombo/April 22/2021)

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Sri Lanka motor racing crash claims 7 lives, 4 critical

ECONOMYNEXT – A deadly accident at motor Race Sri Lanka’s hill country town of Diyathalawa has claimed at least 7 lives police said, after a racing vehicle, in the seasonal Fox Hill Super Cross ploughed in to spectators after running off the track.

Another 21 spectators were injured Sunday, and hospitalized and at least four were critical, police said.

Thousands of people come to watch the Fox Hill Super Cross race, which is usually held in April, as large numbers of people head to the cooler climes in the hills.

According to footage taken by spectators one car overturned on the side of the track.

Sri Lanka’s Newsfirst television said Marshalls were waving flags to caution other vehicles, when another car went off the track and crashed into spectators. (Colombo/April21/2024)

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Widespread support for Sri Lanka debt workout, reform progress at IMF/WB meet: Minister

ECONOMYNEXT – There was widespread support for Sri Lanka’s debt restructuring and acknowledgement of progress made under an International Monetary Fund program, at meeting of the fund and World Bank, State Minister for Finance Shehan Semasinghe said.

“The strides made in our economic recovery and financial stability have been acknowledged as significant advancements towards our country’s prosperity by our stakeholders and international partners,” Minister Semasinghe said in an x.com (twitter) post after attending the meetings.

“Further, it was heartening to note the widespread appreciation and support for Sri Lanka’s debt restructuring process.

“We remain steadfast in our commitment to reaching the restructuring targets and confident of smooth progress in the continued good-faith engagements for a speedy debt resolution that will ensure debt sustainability and comparability of debt treatment.”

Sri Lanka ended a first round of talks with sovereign bondholders in March without striking a deal but some agreement on the basis for a deal.

An initial deal with bilateral creditors have been reached, but they may be awaiting a deal with private creditors to sign formal agreements.

International partners have appreciated reforms made under President Ranil Wickremesinghe, Minister Semasinghe said.

“It was great to engage in productive bilateral discussions with all of whom appreciated the recent economic developments, progress in debt restructuring, strengthening of tax administration, and ongoing governance reforms,” he said.

Sri Lanka’s rupee has been allowed to re-appreciate by the central bank amid deflationary monetary policy, bringing tangible benefits to people in the form of lower energy and food prices, unlike in past IMF programs.

Electricity prices were cut as a strengthening currency helped reduce the cost of coal imports.

Related Sri Lanka central bank mainly responsible for electricity price cut

The currency appreciation has also allowed losses to the Employment Provident Fund imposed to be partially recouped, helping old workers near retirement, as well as raising disposable incomes of current wage earners on fixed salaries.

Related Sri Lanka EPF gets US$1.85bn in value back as central bank strengthens rupee

The IMF, which was set up after World War II to end devaluations seen in the 1930s after the Fed’s policy rate infected other key central banks, started to actively encourage depreciation after a change to its founding articles in 1978 (the Second Amendment).

The usefulness of money as a store of value, or a denominator of current and future values then decline, leading to loss of real savings, real wages and increases in social unrest.

Before that, members who devalued more than 10 percent after printing money for growth or any other reason, faced the threat of suspension from the organization as punishment.

Sri Lanka’s rupee has appreciated to around 300 to the US dollar now from 370 after a surrender rule was lifted in March 2023.

But there is no transparency on the basis that economic bureaucrats are allowing the currency to gain against the US dollar (the intervention currency of the central bank).

The rupee is currently under pressure, despite broadly prudent monetary policy, due to an ‘oversold position’ in the market after recent appreciation made importers and banks to run negative open positions as the usefulness of the currency as a denominator of future value declined with sudden strenghtening. (Colombo/Apr21/2024)

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