ECONOMYNEXT – Sri Lanka’s recovering tourism sector will help end the balance of payments troubles, Central Bank Governor Nivard Cabraal said, echoing statements made by ministers.
“When the pandemic is in the world for around two years there will be a pressure for the country. With the pandemic, the tourism sector is also under pressure,” Governor Cabraal said.
He said, in 2021, even though the foreign reserves had five billion US dollars, Sri Lanka was able to pay six billion US dollars in debt, and save three billion US dollars as well.
Cabraal said, with the tourism sector under pressure the country is not getting an income of nine billion US dollars.
“We are doing all this while we are lacking that income at the moment. What I see is not having patience,” he said.
“In another two-three months, the tourism sector will develop further. When that happens, the pressure we have will reduce.”
Economic analysts using classical principles however have warned that tourism fall is not the reason for currency troubles but liquidity injections.
Tourism receipts are owned by the people who earn the money and the government does not own it.
To get hold of tourism receipts, the government has to borrow the savings of tourism sector workers (or others) or tax them and prevent the money from being loaned out of banks or consumed.
“I clearly say that the 6.8 billion US dollar debt we have for the year 2022 can be paid. It will be challenging, but can be done.” (Colombo/ Jan 17/2022)