GDP of Maldives could fall by 9 percent in worst-case scenario

Maldives Monetary Authority Governor Ali Hashim has estimated that the GDP of the country would fall to -9 percent if the country fails to attract tourists for the remainder of the year.

The governor was speaking in the Economic Committee of the Parliament when he gave a brief overview of the economic impacts on the country if faced with the worst-case scenario of the pandemic virus.

He compared the situation with the Tsunami crisis and the global financial crisis when he asserted that the GDP could fall to -9 percent.

“The biggest effect came from the Tsunami crisis. The GDP fell by 17.7 percent then. During the financial crisis, by 7.7 percent. (It is) Estimated that the worst-case scenario would result in a fall of 9 percent. If it reaches there, the situation will be bad.” said Governor Hashim who added that the worst-case scenario was when tourists stop arriving or when the arrival numbers are low.

“In this scenario, what we have to do is depend on foreign aid and lift up the economy,” said Hashim.

The government is working to obtain as much aid from foreign sources to overcome the situation with the virus. However, some of the preventive measures such as halting travel has become an obstacle in doing so. as the government projects a deficit of MVR 12 billion from the budget this year.

Efforts are underway by the government to obtain aid from institutions such as the World Bank, IMF, and IMFC. World Bank has already donated USD 10 million to the fund set up by the government to overcome the situation with the virus. The government has also decided to obtain USD 150 million which is a part of the currency swap agreement between the Maldives and India which is worth USD 400 million in total.