The OPEC oil producers’ organisation has pledged $20 million in emergency finance to support efforts by the Maldives to shore up its economy against the coronavirus pandemic.

The OPEC Fund for International Development, the development finance arm of the organisation that represents the world’s largest oil producers, said Thursday that the emergency loan will “support the government of the Maldives’ economic recovery plan that includes a package of economic relief measures aimed at mitigating the socioeconomic impact of the Covid-19 pandemic, especially in light of the anticipated downturn in tourism.”

It is amongst a series of public sector loans approved by the fund’s governing board, amounting to US$130.5 million.

In addition to the Maldives, the OPEC Fund is providing public sector loans to Egypt, Tanzania, Mali and Nicaragua.

The public sector loans are part of a broader $390 million package of new funding approved by the fund’s board to support operations in developing countries across the globe.

The OPEC Fund’s loan follows pledges of emergency finance by several global financial institutions, including the World Bank ($17.3 million), Asian Development Bank ($600,000) and the European Union ($3.28 million), to support the Maldives’ efforts to contain a widespread outbreak and shore up its economy.

Maldives has also sought assistance from IMF.

Details of the bailout sought by the Maldives are unclear, but the country’s finance minister told reporters last week that his government was looking to borrow from its Special Drawing Rights (SDR) quota of $21.2 million.

The 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.

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.

All international airlines have suspended scheduled operations to the Maldives, as the island nation enforced a blanket suspension of on-arrival visa in late March 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.

With arrival numbers falling and the 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.

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

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.

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.

Eighteen more cases — all foreigners working or staying resorts and liveaboard vessels except five Maldivians who had returned from abroad — were later identified.

A three-case cluster, detected in Male Wednesday, confirmed community transmission of the coronavirus and put the number of confirmed coronavirus cases in the Maldives to 23.

However, 16 out of the 23 have made full recoveries. Six Maldivian patients are being treated at designated quarantine facilities, whilst another 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 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.

Following Wednesday’s confirmation of community transmission, capital Male is in lockdown, as health authorities conduct contact tracing in one of the world’s most densely populated cities.

The lockdown bans all public activity and transport in capital Male and its suburbs of Hulhumale and Villimale for a day. Any movement in and out of the city and its suburbs as well as the neighbouring industrial islands of Thilafushi and Gulhifalhu are also banned.

Cover photo: Maldivian President Ibrahim Mohamed Solih (R) meets with the Director General of OPEC Fund for International Development Dr Abdul Hamid Al Khaleefa (C) during a courtesy call held at the President’s Office in Maldivian capital Male on January 16, 2020. FILE PHOTO/ PRESIDENT’S OFFICE