Portugal’s government is preparing a support package for the country’s crushed tourism sector, the economy minister said on Wednesday, including delayed loan repayment schedules, debt-to-equity instruments and grants.
Economy minister Pedro Siza Vieira told a parliamentary committee the package would aim to ensure companies in the sector survived the crisis “without having their balance sheets overloaded with debt”.
“Tourism will need more intense support… these companies will be depleted after a year of of the pandemic in which they have exhausted their (financial) reserves,” Siza Vieira said.
Revenue from holidaymakers played a crucial role in Portugal’s recovery from the 2010 economic and debt crisis, totalling 15% of Portugal’s gross domestic product in 2019.
But lockdowns and travel restrictions throughout the pandemic have paralysed the sector, with just a third of the usual number of tourists visiting the country at the height of the tourist season last summer, government data showed.
The sector’s revenues are expected to have dropped 80% in 2020, according to Portugal’s hotel association, who said in a statement on Wednesday a further 100,000 jobs could be lost this year if it did not receive targeted support.
“Medium-sized hotels won’t survive this long winter of tourism and, in the reopening, they won’t be here to pull the country’s economy,” AHP president Raul Martins said.
The government is also in discussion with the Bank of Portugal and Portuguese Banking Association about extending a moratorium on loan repayments currently in place until September even further, and postponing maturities on remaining debt, Siza Vieira said.
“Moratoriums are very important. We are adjusting the duration and conditions of these moratoriums, aiming to marry the end of them with the recovery of the economy,” he said.
Portugal’s banks have suspended capital and interest repayments on 46 billion euros of corporate and household debt to avoid a jump in bad loans.
(By Sergio Goncalves; adittional reporting by Catarina Demony; Editing by Victoria Waldersee, William Maclean)