Credit for Tourism

Government boosts credit line for tourist industry

Spain expects overseas arrivals to fall this summer

May 30th , 2009

The Spanish government on Frday approved an extension of a soft credit line for the key tourist industry as it predicted a double- digit fall in visitors this summer due to the sharp economic downturn in Spain’s main markets. Deputy Prime Minister María Teresa Fernández de la Vega said the sector would be provided with a further €600 million in funding. She said the €400 million already disbursed on more than 1,000 projects, including improvements to tourist facilities, had generated 15,000 jobs.

Loans provided from the credit line carry an annual interest rate of 1.5 percent and the principal on the loan can be paid back over as many as 12 years, with a grace period of up to four years. De la Vega said that according to projections drawn up by the Industry, Tourism and Trade Ministry, the number of overseas visitors this summer is expected to drop 10 percent from a year earlier to 23.3 million.

Main markets weak

The deputy prime minister not ed unemployment had risen sharply in Spain’s main market, the United Kingdom, as well as in France and Italy. Britain accounts for about a quarter of all overseas visitors to Spain. Apart from the contraction in the UK economy, the pound has also depreciated sharply against the euro, making countries such as Spain more expensive. Germany is Spain’s second-biggest market, followed by France and Italy. Overseas arrivals in the first four months of this year fell 11.9 percent to 4.5 million. Arrivals from Britainwere down 18.4 percent, while the number of visitors from Germany shrank 10.1 percent.

Spending by overseas visitors in the first four months of the year declined 7.3 percent to ¤12.057 billion, although average spending per tourist rose 5.7 per- cent to €905. Receipts from Brit ish tourists fell 15.7 percent in the four months, compared with the same period a year earlier.

Tourism accounts for about 11 percent of Spain’s GDP and employs some 2.6 million workers. It is also a valuable source of overseas receipts in a country that runs a persistent and large merchandise trade deficit. According to the figures released Friday by the Bank of Spain, the surplus on the tourism account on the balance of payments narrowed 15.5 percent in the first quarter of the year from the same period a year earlier to €4.080 billion.

A. S., Madrid (El Pais English language Edition)

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