Sri Lanka may not be able to extend a debt moratorium for hotels and travel companies given during a Coronavirus crisis as concerns emerge over the stability of banks, tourism Minister Harin Fernando said.

Sri Lanka’s central bank had printed money for two years to suppress interest rates and created the worst currency crisis in its history with the rupee falling from 200 to 370 to the US dollar in a botched float with a surrender requirement so far this year.

Interest rates have since been raised to kill domestic demand and stabilize the rupee. The higher rates and currency collapse lead to more bad loans as consumption falls, which tends to lead to economy-wide bad loans.

The industry has no cash flow to make any arrangements to pay loans and their priority is to pay salaries, which the industry is already finding it difficult to do, Shanthikumar said.