Ministry of Finance on Wednesday, began distribution of loans under its 'Economic Recovery Plan ' via the SME Development Finance Corporation (SDFC), as part of the ongoing efforts to mitigate financial repercussions of the COVID-19 pandemic.
Private businesses and small, medium enterprises are eligble for the loan scheme. The loans are issued at an interest rate of six percent and must be settled within three years and carry a six-month grace period to begin repaying the loaned amount.
As an additional criteria, only businesses that generate less than an annual MVR 10 million in revenue can apply.
According to the government, businesses that retain their employees during the ongoing crisis will be given priority for the loans.
As part of government's economic recovery plan to minimize the negative financial impact of the pandemic, 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 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 state 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.
Governor of Maldives Monetary Authority (MMA) Ali Hashim declared that local economic growth might reach negative nine percent in the estimated worst case scenario of the economic recession caused by the virus.
The largest hit taken by the Maldivian economy in recent times was caused due to the "Global Financial Crisis" in 2009, resulting in economic decline of negative 6.6 percent.