STO gets $15 mln ITFC emergency loan for coronavirus supplies
An Islamic financing institute has arranged a $15 million emergency loan to the Maldives main state-owned trading company to procure essential supplies for the coronavirus response.
In addition to the $15 million financing extended to the State Trading Organisation (STO), the International Islamic Trade Finance Corporation (ITFC) is also providing an undisclosed grant for supporting STO’s sourcing of emergency medical equipment during the coronavirus outbreak.
With ITFC’s loan and grant, STO says it will purchase staple food and medicine, as well as procure crucial personal protective equipment for the use of medical professionals.
“The government of Maldives began preparing well in advance for a possible Covid-19 outbreak in the country by conducting a risk assessment, and forming a national response guideline and health emergency coordination committee, in addition to arranging for supplies of testing kits so that testing for the virus could be conducted locally,” STO chief executive Husen Amru Mohamed Rashad was quoted in a statement, as saying.
“The emergency ITFC financing granted to STO further strengthens the government’s efforts to assess risks, immediate and intermediate needs for screening, contact tracing, testing of suspected cases and treating those who are affected. In addition, the funding will further help to meet the needs of the people through the steady supply of necessary food staples.”
Both the financing and grant are part of the Islamic Development Bank (IDB) affiliated ITFC’s Covid-19 response to support its member countries.
ITFC’s Covid-19 rapid response facility of $300 million is part of the wider envelope of $2.3 billion pledged by the IDB under its 3Rs response package, ‘Respond, Restore and Restart’.
“It is our mandate to stand by the side of our member countries and provide the critical support they need in challenging times like this. In alignment with the IsDB 3Rs Package, ITFC is helping the Republic of Maldives in its efforts to address the spread of the novel coronavirus through supporting the two critical sectors: food and healthcare,” ITFC chief executive Hani Salem Sonbol said.
Authorities managed to mitigate the spread of the virus and the Covid-19 respiratory disease it causes amongst the Maldives’ citizens and residents early on by closing the Indian Ocean tourist paradise’s borders, earning praise from the World Health Organisation.
But the disease is now spreading rapidly, especially within the large migrant worker community in capital Male. Authorities have ramped up relocating workers from the cramped up dormitories in one of the world’s most densely populated cities to temporary accommodation units.
An estimated 63,000 foreign nationals work in the Maldives illegally out of a migrant worker population close to 145,000.
Foreign workers in the Maldives, predominantly Bangladeshi and Indian men, are subjected to practices indicative of forced labour, including fraudulent recruitment, confiscation of identity and travel documents, withholding or non-payment of wages, and debt bondage.
As most migrant workers live in extremely poor conditions, a widespread outbreak amongst them could lead to large virus clusters, overwhelming the country’s already under staffed and strained healthcare system and making it harder for authorities to contain the spread of the virus.
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 six-case cluster of locals, detected in capital Male on April 15, confirmed community transmission of the coronavirus. Several more clusters have since been identified, bringing the total number of confirmed case in the Maldives to 1,106.
Four deaths have been reported and 80 have made full recoveries. Five remain in intensive care.
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 stay-at-home orders in capital Male and its suburbs, a ban on inter-island transport and public gatherings across the country, and a nationwide closing of government offices, 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 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 13 per cent economic contraction this year — an estimated $778 million hit.
The government had announced plans to shave MVR 5 billion ($324 million) off state expenditure and reduce the total state expenditure for the year to MVR 30 billion ($1.944 billion) from the approved MVR 38.7 billion ($2.5 billion).
Austerity measures include a 20 per cent cut on salaries and allowances of all political appointees, 25-35 per cent cuts on salaries and allowances of public sector employees, and 30-70 per cent cuts across travel, training, renovations and capital equipment budgets.
The Maldives is also looking to borrow $233.37 million from international lenders to plug the gap in balance of payments stemming from the coronavirus pandemic.
Funds already pledged by international lenders include $28.9 million from the International Monetary Fund (IMF), $20 million from the OPEC Fund for International Development, $17.3 million from the World Bank, and $3.28 million from the European Union.
In the meantime, the government will borrow MVR 4.2 billion ($272 million) under an overdraft facility at the central bank to cover state expenses and maintain public services amidst the coronavirus pandemic.