International Corporation Agency (JICA) signed a USD 47.5 million (JPY 5 billion) loan agreement with the Maldivian government on Wednesday, marking Japan's largest concessional loan extended to the island nation in history.
The agreement, which is designed to provide an Official Development Assistance (ODA) loan for the COVID-19 Crisis Response Emergency Support Loan, was signed by the Resident Representative for JICA Maldives Mitsuyoshi Kawasaki and Minister of Finance Ibrahim Ameer in a ceremony held at the ministry.
According to JICA, the concessional loan was extended with a fixed interest of 0.01 percent annually for a period of 15 years with a grace period of four years.
Noting that the objective of the loan is to mitigate the negative social and economic impacts of the ongoing COVID-19 pandemic, JICA stated that the loan will "implement economic policy aimed at expansion of social welfare for the vulnerable population, thereby contributing to promoting the country’s social and economic stabilization and its development efforts".
"This project will contribute to the achievement of SDGs Goals as well as others".
Minister of Foreign Affairs Abdulla Shahid and Ambassador of Japan to Maldives Keiko Yanai signed the Exchange of Notes for the loan earlier this week.
Speaking at the ceremony, Shahid thanked the government of Japan, hailing the country as "a very special friend and steadfast ally" to the island nation and highlighting the decades-long bilateral ties between the two countries.
Ambassador Yanai noted that the loan was extended as Japan wanted to contribute towards alleviating the high fiscal stress caused by the social and economic impact on Maldives due to the prolonged pandemic.
"This is virtually a zero-interest rate loan, because it is an emergency support loan to the government of Maldives for the people of Maldives", she said.
Considered one of the three Asian giants, Japan had extended support to the island nation’s COVID-19 response in various forms prior to the aforementioned loan as well.
The country previously extended grants totaling up to USD 7.5 million for the Maldivian government to equip and improve health services at atolls and regional hospitals, support small and medium enterprises in agri-businesses affected by COVID-19 and to complement the state’s efforts to respond to COVID-19.