Ministry of Finance, on Friday, projected a 50 percent decrease in tourist arrivals compared to 2019 figures as a result of the ongoing COVID-19 pandemic.
Finance Minister Ibrahim Ameer made the statement during a press briefing held at the National Emergency Operations Centre (NEOC) to present the ministry's report concerning projected economic outcomes.
Compiled in collaboration with Maldives Monetary Authority (MMA), Ministry of Economic Development and Ministry of Tourism, the document includes a total of five scenarios on the economic outcomes of COVID-19 in Maldives.
According to Minister Ameer, the third economic scenario included in the report details that on-arrival visas, which the government stopped issuing on March 27, would recommence in July.
The 50 percent decrease projected in scenario 3 places total tourist arrivals at 845,546 compared to the 1.7 million holidaymakers that travelled to Maldives in 2019.
Therefore, a further 462,868 tourists are estimated to arrive during the remainder of 2020 as per the scenario.
The third scenario also projects a budget deficit of 13.7 percent (MVR 13 billion) and a reduction of state revenue to MVR 15.2 billion. Total state debt sans guarantee is expected to increase to MVR 70 billion, which accounts for 86.6 percent of Gross Domestic Product (GDP).
Despite the likelihood of scenario 3, the minister added that both scenario 4 and 5, which detail more severe impacts on the Maldivian Economy, would be possible if the current situation escalates.
Scenario 4 predicts that total tourist arrivals in 2020 will decrease to 242,404 while scenario 5 excludes the possibility of any additional tourist arrivals this year.
As over 70 percent of the country’s GDP is attributed to revenue generated by the tourism industry, the economy continues to face severe repercussions due to travel restrictions imposed over the COVID-19 outbreak. It is estimated that the country will face a shortfall of approximately USD 450 million (MVR 6.9 billion) in foreign currency.
In a bid to counteract the financial impact of the COVID-19 pandemic on the local economy, the government has introduced a financial stimulus package with MVR 2.5 billion intended to prevent the closing down of local businesses and the loss of jobs.
The government also 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.