Minister of Finance Ibrahim Ameer, on Wednesday, revealed that the government would extend the Income Support Allowance until the end of 2020.
The announcement was made whilst Minister Ameer was addressed at the parliament. He further noted that the government was prepared to introduce additional extensions if the economic circumstances necessitated such a measure.
In response to questions posed by parliamentarians, the finance minister disclosed that the state had disbursed a total of MVR 8.4 million as Income Support Allowance to fishermen while an MVR 100 million credit scheme was established in order to regulate the price of Yellowfin Tuna.
According to the finance ministry, the government has disbursed a total of MVR 101.3 million under the scheme, as of October 1.
The Maldivian government introduced the Income Support Allowance to provide a temporary monthly allowance of up to MVR 5,000, to individuals that lost their employment or income as a result of the ongoing COVID-19 pandemic.
Implemented by the Ministry of Economic Development in collaboration with the National Social Protection Authority (NSPA) and Maldives Pension Administration Office (MPAO), the allowance was initially paid out for three months, across April to June, to eligible individuals.
In June, the World Bank approved financial assistance of USD 12.8 million to support the government's Income Support scheme. The assistance comprises a USD 6.4 million grant and a USD 6.4 million credit from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries.
The restrictions on local and global travel and tourism as a result of the COVID-19 pandemic had severe repercussions on the Maldivian economy, with many losing their jobs and local companies struggling to stay afloat.
In mid-April, the World Bank estimated that Maldives will be the worst-hit country in the South Asian region, in the ensuing economic regression caused by the pandemic.
In a bid to counteract the financial impact of COVID-19, the Maldives government introduced an economic relief fund with MVR 2.5 billion intended to prevent the closing down of local businesses and the loss of jobs.
Meanwhile, the Finance Ministry projected earlier that the state deficit would reach MVR 13 billion this year compared to the MVR 5.9 billion originally stated in the 2020 State Budget, as a result of economic repercussions caused by the COVID-19 pandemic. The ministry also projected that the total state debt sans guarantee would increase to MVR 70 billion, which accounts for 86.6 percent of Gross Domestic Product (GDP). An overall 115 percent drop is projected in the GDP, along with 81.3 percent for nominal GDP.
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