Maldives govt announces MVR 2.5 bln economic recovery package

The Maldives government has unveiled a MVR 2.5 billion recovery package to mitigate the losses caused to the country's economy due to the global COVID-19 pandemic.

In a joint press conference held Thursday by the Finance Ministry, Economic Ministry and Central Bank, Maldives Monetary Authority (MMA), Finance Minister Ibrahim Ameer said the economic package announced by the government will provide significant support for the current difficult circumstance caused to the country's economy.

"The government has made the decision to introduce an Economic Recovery Package worth MVR 2.5 billion. Under the package, we will facilitate local businesses to acquire working capital via banks. We will issue loans upto MVR 2 billion as part of this package," said the minister.

The decision was taken to alleviate difficulties caused to local businesses so that the companies can continue to pay the salaries and remunerations of its staff without any reductions, and to ensure job security for those employed in the private sector, added the minister.

The minister said the package will be issued with a grace period of six months, and with an interest rate of six percent. A period of three years will be granted to pay back the loan.

Economic Minister Fayyaz Ismail said the businesses taking up the offer will be asked to make the best use of the funds, and will be conditioned not to make any of its current employees redundant.

"Only those businesses that agree to these conditions will be eligible to receive this loan facility," said the minister.

Addressing concerns on the possible increase in foreign currency exchange rates, Governor of MMA Ali Hashim said the reserves that the banks are mandated to uphold will be decreased under efforts to maintain the amount of US dollars circulated within the country. Therefore, the current rate of Maldivian currency will be maintained, said the governor.

In this regard, the liquidity ratio of banks will be decreased to five percent and USD 150 million will be injected into banks, he revealed. The funds will be arranged under the USD 400 million currency swap facilities exchanged with India's Reserve Bank last year, said the governor.

13 people have tested positive for COVID-19 thus far in the Maldives. All infected persons are foreigners either working or holidaying in the Maldives. The global pandemic has severely impacted Maldivian economy after the country closed its doors to tourists arriving from severely affected regions and countries. The government estimates a USD 400 million decline in the amount of foreign currency entering the country.