Sri Lanka Forex Crisis Hits Tourism Industry, Canada and UK Warn Travelers | Travel

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The current forex crisis in Sri Lanka will further hit its tourism industry as the UK and Canada have warned travelers to be aware of the current economic situation in the island nation.

According to a latest advisory issued by the British government, the economic situation is deteriorating in Sri Lanka with shortages of basic necessities such as medicine, fuel and food due to a shortage of hard currency to pay for imports.

“There can be long lines at grocery stores, gas stations and pharmacies. Local authorities may impose electricity rationing, leading to power outages,” the notice said.

ALSO READ: Sri Lanka imposes continuous power cuts as cash crisis worsens

Canada has also advised its citizens to keep supplies of food, water and fuel on hand in case of prolonged disruptions and to ensure they have enough medication on hand as they may not be available. and monitor local media for the latest developments.

The UK is Sri Lanka’s third largest source of tourists behind Russia and India.

Tourism accounts for around 5% of Sri Lanka’s Gross Domestic Product (GDP), with Britain, India and China being the main markets.

The number of international tourist arrivals to Sri Lanka was down 70.8% in March 2020 from a year ago as the tourism industry was hit hard by the coronavirus pandemic.

The notices came after the Sri Lankan government recently imposed import restrictions on 367 items such as dairy products, fruits and fish which have been labeled as ‘non-essential’ in the fight against the economic crisis triggered by the shortage of foreign currency.

Sri Lanka is facing its worst currency crisis ever after the Covid-19 pandemic hit the country’s income from tourism and remittances.

By December last year, the reserve position had fallen to just one month of imports, or just over $1 billion.

In recent months, the public has experienced a shortage of many basic necessities due to the currency crisis. Import restrictions to save money have threatened the supply of cooking gas and fuel in addition to impending power cuts.

In January, India announced a $900 million loan to Sri Lanka to replenish its depleted foreign exchange reserves and to import food, amid shortages of nearly all essential commodities in the country.

ALSO READ: Sri Lanka announces daily island-wide power cuts in tourist areas

New Delhi also gave Colombo a $400 million swap deal to boost its reserves.

Meanwhile, a team from the International Monetary Fund (IMF) will arrive here for talks with the country’s top leaders after the government announced the floating of the rupee against the US dollar.

“Senior IMF officials will travel to Colombo on March 14-15 to brief President (Gotabaya) Rajapaksa on the results of the Article IV consultation, including the views expressed by Executive Directors during the meeting. of the Executive Board held on February 25,” said the IMF mission chief. Sri Lanka’s Masahiro Nozaki said in a statement.

The government continued to ignore the IMF’s approach to come up with a bailout despite pressure from economists, including opposition parties.

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