Businesses hit by the coronavirus pandemic will be able to apply for emergency fast track financing starting next week under a MVR 2.5 billion ($161.84 million) stimulus package, officials in Maldives announced Wednesday.

The MVR 2.5 billion stimulus plan, announced last week, includes MVR 1.55 billion ($100 million) in emergency loans for businesses to meet short-term working capital needs.

Finance minister Ibrahim Ameer told reporters in capital Male that emergency loans for resorts and local businesses with a turnover of over MVR 10 million in 2019 will be arranged through Bank of Maldives (BML).

Affected small and medium enterprises as well as self-employed individuals will be able to avail the loans through the SME Development Finance Corporation (SDFC), a state-owned financial institution exclusive for small and medium enterprises, he said.

“These are fast track facilities, so processing won’t take two to three months,” the minister said.

The unsecured emergency loans will come with a six-month grace period and a repayment period of three years. Interest will be charged at six per cent, but no interest will be charged during the grace period.

The minister stressed that the government will mandate businesses that avail the emergency financing to retain their local workforce and pay full salaries to those with wages below MVR 10,000 ($648).

“Our primary focus is to ensure job security for our workers,” he said.

The stimulus plan 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 commercial banks.

BML had earlier announced 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.

The Covid-19 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.

Before the pandemic, the government had been bullish about tourism prospects, targeting two million, high-spending holidaymakers this year after last year’s record 1.7 million.

However, tourist arrivals saw a year-over-year decline of 22.8 per cent in the first 10 days of March. With arrival numbers falling, several resorts across the Maldives had been closed.

Tourism has been the bedrock of the Maldives’ economic success. The $5 billion-dollar economy grew by 6.7 per cent in 2018 with tourism generating 60 per cent of foreign income.

However, the government is at present projecting a possible 5.6 per cent economic contraction this year — an estimated $446 million hit.

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.

Sixteen more cases — all foreigners working or staying resorts and liveaboard vessels except three Maldivians who had returned from the United Kingdom — were later identified.

However, 13 out of the 16 have made full recoveries. The remaining three patients are being treated at designated quarantine facilities, whilst the other two had been repatriated to their home country of Italy.

The 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 partial curfew in capital Male and its suburbs, and a nationwide closing of schools, colleges and universities. Non-essential services and public places in the capital such as gyms, cinemas and parks have also been shut.

Restaurants and cafes in the capital have been asked to stop dine-in service and switch to takeaway and delivery.

A nationwide shutdown of all guesthouses, city hotels and spa facilities located on inhabited islands is also in effect.

The Maldives on Friday enforced a blanket suspension of on-arrival visa in a bid to combat the spread of the novel coronavirus.

Even before the visa suspension, 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, Malaysia and Sri Lanka. 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 were also banned from entering the country.

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

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

Photo: Mihaaru News