Minister of Finance Ibrahim Ameer has stated the Maldivian economy is in dire need of assistance to fight the economic regression caused by the COVID-19 pandemic.
Highlighting the economic contraction as a result of COVID-19, Finance Minister Ameer said the Maldives will be one of the hardest hit nations by the pandemic as the economy is largely dependent on tourism which is currently at a halt. The finance minister provided extensive details on the impact and the efforts of the administration to mitigate and brace the impact and overcome the situation.
Providing the details of the projected impact, the minister said the Gross Domestic Product (GDP) will decrease significantly with no tourists arriving in the Maldives. Additionally, the minister said the administration expects more people to lose their jobs and hence increasing the unemployment rate. He also said the foreign income will fall significantly following a reduction in exports.
The ministry is also expecting inflation to go higher although there is currently no rate of inflation projected. Stating the projected income would decrease drastically, the finance minister urged all government institutions to cut costs to ensure deficits can be financed.
Minister Ameer said projects financed from the Public Sector Investment Programme (PSIP) scheduled but not commenced thus far will not be tendered and budgets allocated to local councils will not be issued in efforts to manage funds. He added the government must reduce costs, seek foreign grants and loans in addition to issuing T-bills to local markets in order to manage cash flow.
The finance minister called for pay cuts and stopping new hires along with cutting costs on transport, maintenance, and capital expenditure. Additionally, the minister said efforts are underway to seek debt relief and moratoriums. He also noted all government offices have been instructed to get approval from the ministry to spend any amount over USD 2,270.
Moreover, finance the minister also said measures must be taken to maintain the core of the economy which includes human resources, capital and assets. The minister said ignoring such measures would be detrimental to the economy in the future. He remarked the administration is working effortlessly to overcome the impact of COVID-19 and urged everyone to cut costs.
The minister said national solidarity is the key to overcoming the economic impact of the COVID-19 pandemic.