COVID-19: Maldives projects MVR 12 billion deficit

COVID-19: Maldives projects MVR 12 billion deficit

Minister of Finance Ibrahim Ameer on Wednesday, revealed estimates that the state deficit would reach MVR 12 billion, as a result of economic repercussions caused by the global COVID-19 pandemic.

Speaking at the nation-wide broadcasted press conference at the National Emergency Operations Centre (NEOC), the Minister iterated the need to source additional funds in response to the economical shortcomings of the virus.

Although the government initially projected an eight percent growth in Gross Domestic Product (GDP), Minister Ameer noted that the country now faces the possibility of reaching a negative 5.6 percent. As a result, Maldives could lose MVR 2.6 billion to MVR 6.9 billion in potential revenue to the government. He added that the tourism industry could record a loss within the range of 37 and 50 percent.

In a bid to counteract the financial impact of the COVID-19 pandemic on the local economy, Maldives government introduced a financial stimulus package with MVR 2.5 billion intended to prevent the closing down of local businesses and the loss of jobs.

As part of government's economic recovery plan to minimize the negative financial impact, Bank of Maldives (BML) will push back its loan repayment period by six months, along with a 20 percent discount on repayment amount, while Housing Development Finance Corporation (HDFC) and SME Development Finance Corporation (SDFC) will extend loan repayments by six months. In addition, Maldives central bank will distribute USD 150 million to banks to mitigate the challenges in acquiring US dollars.

Earlier, the government vowed to reduce state spending by MVR 1 billion. In this regard, the government had slashed the salaries of all political appointees and heads of state-owned enterprises (SOEs) by 20 percent. The Parliament followed suit, approving a 20 percent cut on their members’ salaries as well.

The World Health Organization has classified the spread of COVID-19 as a global pandemic. The novel coronavirus has infected over 935,100 people and claimed over 47,150 lives around the world. However, out of those infected, more than 193,980 people have recovered.