GALLE, Sri Lanka — Tourists are enjoying homemade ice cream on the verandah of Tariq Nassim's shop at Galle Fort, a key destination in Sri Lanka's tourism revival amid the country's ongoing recovery from its severe economic crisis.

Nassim's business, 'Dairy King', offering 22 flavors of ice cream, is one of many enterprises devastated by the crisis that followed a sharp decline in foreign exchange reserves, leading to severe shortages of essential imports like fuel and fertilizer.

"The impact was immense," said Nassim, 62, whose 13-year-old business suffered due to both the 2022 financial crisis and the previous Covid-19 pandemic.

"We haven’t been able to return to pre-Covid levels," he added. "The timeline for recovery remains uncertain."

The future of the island nation’s recovery depends largely on the reforms and policies of the new president, elected in this month’s presidential election, the first since the economic collapse.

"The new president must be capable of appointing the right officials and managing the country effectively, as we cannot afford further setbacks," stated M. Shanthikumar, president of the Hotels Association of Sri Lanka.

Tourism, vital for Sri Lanka's economy with its beautiful beaches, ancient temples, and renowned tea, was severely impacted as the crisis drove inflation to 70%, power tariffs up 65%, and the currency down by 45%.

Mass protests in Colombo, triggered by power cuts, fuel shortages, and medicine scarcity, led to the departure of then-president Gotabaya Rajapaksa, who has since returned.

Prime Minister Ranil Wickremesinghe, who was elected to complete Rajapaksa's term, has guided a cautious recovery with support from a $2.9 billion IMF bailout and a restructuring of $25 billion in foreign debt.

Currently, inflation and interest rates have dropped to single digits, and growth of 3% is anticipated for 2024, marking the first increase since the economy contracted by 7.8% during the crisis.

Tourism, a significant foreign exchange earner employing 205,000 people and contributing 2.5% to GDP in 2023, aims to generate $3 billion from two million tourists this year, matching 2019 figures.

On Galle Fort’s cobbled streets, visitors shop for silver jewelry, walk the historic ramparts, and take photos in front of colonial-era buildings.

Despite the recovery, Nassim's earnings remain at half their pre-crisis level due to a lack of local customers. He hopes the new president will enhance regulations and attract high-spending tourists with extended stays.

The industry's top priorities include improved facilities, enhanced marketing, and a more efficient visa process.

"Sri Lanka needs foreign exchange, and 85% of tourism earnings stay within the country," said Hiran Cooray, chairman of Jetwing Symphony, which operates around 35 hotels and villas.

"Safety and stability are crucial. Without them, tourism will suffer."

The main presidential candidates, including Wickremesinghe, opposition leader Sajith Premadasa, and Marxist-leaning parliamentarian Anura Kumara Dissanayake, all pledge to address the economic issues but with differing strategies.

Dissanayake promises a new tourism agency, direct flights from key tourist countries, and support for mid-level businesses. Wickremesinghe aims to upgrade infrastructure and double tourist arrivals to five million within five years. Premadasa plans to reduce bureaucratic hurdles, encourage investment, and improve safety for travelers.

"We need growth," said Shiran Fernando of the Ceylon Chamber of Commerce. "Restructuring debt and improving reserves maintain stability, but they don’t drive growth."

Disclaimer: This image is taken from Reuters