Maldives on Thursday launched an emergency MVR 2.5 billion ($161.84 million) facility and a package of financial measures to shore up the local economy against the coronavirus pandemic.

The MVR 2.5 billion stimulus plan, announced by finance minister Ibrahim Ameer at a joint press conference with the central bank governor in capital Male Thursday afternoon, includes MVR 1.55 billion ($100 million) in emergency loans for businesses to meet short-term working capital needs.

The loans will be arranged through the banking system on concessionary terms, including interest rates up to six per cent, a six-month grace period and a three-year repayment period.

“This emergency facility will enable local businesses to maintain their full local workforce and ensure full pay for the employees,” he said.

The emergency facility is complemented by a package of financial measures, including a six-month moratorium on principal and interest repayments for personal and business loans sanctioned by Bank of Maldives (BML).

Similar moratoriums are being worked out with other banks operating in the country, the finance minister said.

BML’s moratorium on loan repayments comes days after announcing a $2 million short-term financing facility for the tourism industry.

The facility by the country’s largest bank allows operational resorts and guesthouses finance up to $2 million to manage their working capital requirements, with a repayment period of three years.

Meanwhile, Thursday’s joint press conference saw central bank governor Ali Hashim announce a $150 million facility for banks to ensure healthy foreign currency reserves.

The facility is arranged through a $400 million stand-by currency swap signed by the Maldives Monetary Authority (MMA) and Reserve Bank of India (RBI) last year, he said.

Minimum reserve requirement of banks will also be slashed from 10 to five per cent to allow banks to increase lending.

“These measures will increase the broad money in the economy. Our message is clear; we don’t want to and we aren’t devaluing our currency. We don’t see that happening either,” Hashim said.

In recent weeks, central banks and governments around the world have announced major stimulus plans.

The global coronavirus outbreak has hit the Maldivian economy hard, as travel restrictions and other preventive measures affect the country’s lucrative tourism industry, which contributes the bulk of the island nation’s state revenue and foreign reserves.

From the hospitality industry to the airline sector, companies have warned that their long term survival is under threat.

Major hospitality companies in Maldives have closed their resorts. Domestic airlines have suspended service on some sectors and reduced frequency on others.

On March 8, Maldives reported its first cases of the novel coronavirus, as two hotel employees tested positive for Covid-19 at a luxury resort in the archipelago.

Eleven more cases — all foreigners working or staying resorts and liveaboard vessels — have since been identified. All the patients are under isolation, being treated at designated quarantine facilities.

Maldives announced a state of public health emergency on March 12, the first such declaration under a recent public health protection law.

The public health emergency declaration has allowed the government to introduce a series of unprecedented restrictive and social distancing measures, including a ban on inter-island travel of tourists, including for excursions and between resort islands.

A nationwide shut down of all guesthouses and city hotels has also been ordered. Spa facilities located on inhabited islands have also been closed.

The Maldives had closed its borders to arrivals from some of the worst-hit countries, including mainland China, Italy, Bangladesh, Iran, Spain, the United Kingdom and Malaysia. Visitors from three regions of Germany (Bavaria, North Rhine-Westphalia and Baden-Württemberg), two regions of France (Île-de-France and Grand Est) and two regions of South Korea are also banned from entering the country.

All direct flights to and from China, Italy, South Korea and Iran had also been cancelled.

Cruise ships and foreign yachts had also been banned from docking at any of the country’s ports.

The island nation had installed thermal screening cameras at its international airports.

Quarantine facilities, including designated islets from the 1,192 islands that make up the archipelago, had been established.

Photo: Mihaaru News