Economics Ministry outlines aid mechanisms for tourism sector

The fight against the spread of COVID-19 and the restrictions introduced have hit tourism sector hard, so the Ministry of Economy will offer three measures to support the sector, EM said in a statement October 27.

These measures are protection of commercial activity, cost reduction, and boosting turnover.

"The sector has actually stopped: the international passenger flow has been disrupted and the low season has begun, resulting in a significant reduction in domestic travel. There is a high risk of insolvency in the sector," said Economics Minister, Jānis Vitenbergs (KPV LV).

Therefore, EM, together with the industry, prepared proposals for both short-term solutions and support that would contribute to the recovery of the sector in the coming years.

Measures for the protection of commercial activity:

  • prohibition of initiating insolvency proceedings by 31 August 2021 for all economic operators in the tourism sector;
  • provision of a grace period in loans granted by Altum to all economic operators in the tourism sector until 31 July 2021 for a deferred part of the principal amount under difficult economic conditions.

Measures to reduce costs of commercial activities:

  • help to cover the costs of repatriation. Use the balance (around €4.5 million) to support hotels and allow the costs to be extended to operational expenditure (including wage costs but not fixed assets). The potential aid period – 31 November (subject to agreement with European Commission) to June 2021;
  • together with the Ministry of Environmental Protection and Regional Development, to evaluate the possibility for tourism business merchants to reduce costs for utilities in municipal and public-controlled capital companies;
  • granting discounts to local governments for real estate tax and rental to tourism accommodation and catering merchants in Rīga and Jurmala by 30 September 2021;
  • state guarantees for tourism operators (redeployment of funding from existing resources). State guarantees to tourism operators shall be granted until 31 December 2023.

For the boost of turnover of commercial activities:

  • provide for the payment of wages during employee training for economic operators in the tourism sector, possibly by covering the first salary without co-financing of the merchant, thereby partly addressing the issue of the remuneration of viable economic operators, with €1.8 million being diverted for that purpose;
  • evaluate reduction of the restrictions, in cooperation with the Ministry of Health and the Centre for Disease Prevention and Control,  to allow business and organized group tourists to enter Latvia without the requirement to comply with self-isolation;
  • assess the possibility of investing €100 million in tourism infrastructure under the Recovery and Resilience Strategy by 2023, which would contribute to the development of more entertainment tourism by ensuring a faster development of tourism exports.

EM pointed out that there are different types of companies in the tourism sector: online and offline information and services providers, travel agents and tour operators, accommodation, destination management organizations, tourism site managers and passenger carriers. However, the main sectors of the sector are three: the tourist accommodation sector, the catering sector and the tourism operator and agency sector.

EM suggested earlier this week that tourism sector needs additional support.

 

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