Maldivian resorts hit by the coronavirus pandemic can apply for emergency financing up to MVR 7.71 million ($500,733) starting Wednesday, authorities has announced.

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

Finance ministry said on Tuesday that the emergency loans for resorts as well as local businesses with a turnover of over MVR 10 million in 2019 will be arranged through Bank of Maldives (BML).

In a separate statement, BML said loans up to MVR 7.71 million be arranged to resorts that were profitable in 2019, have no non-performing facilities at any financial institution, and have a positive cash flow forecast for three years.

For non-tourism businesses with a turnover of over MVR 10 million in 2019, the bank will provide loans up to MVR 1 million ($64,946). Those businesses are also required to demonstrate profitability in 2019 and good credit history.

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

These emergency loans complement a separate scheme by BML that allows operational resorts and guesthouses to obtain up to $2 million in short-term financing to manage their working capital requirements.

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

The government will mandate all businesses that avail the emergency financing to retain their local workforce and pay salaries.

Applications for the loans will open on Wednesday.

In addition to the emergency financing, the government’s stimulus plan is complemented by a package of financial measures, including a six-month moratorium on principal and interest repayments for personal, business and housing loans sanctioned by commercial banks.

The government is also subsidising utility bills in March and April.

Those that lose jobs due to the coronavirus pandemic will also be paid unemployment benefit for a period of three months.

Meanwhile, the central bank has announced 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.

If required, minimum reserve requirement of banks will also be slashed from 10 to five per cent to allow banks to increase lending.

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. Officials say the number of tourist arrivals to the Maldives could drop by half in 2020.

With arrival numbers falling and a blanket visa suspension in effect, 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 5.7 per cent economic contraction this year — an estimated $778 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.

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

However, 13 out of the 17 have made full recoveries. The four Maldivian 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.

Cover photo: Maldivian finance minister shakes hands with Tim Sawyer, CEO and Managing Director of Bank of Maldives, at a ceremony held in Maldivian capital Male on December 12, 2019. PHOTO/ BML