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As tourism picks up once more, Maldives steps up efforts to diversify its faltering economy


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Dotted with island resorts and endowed with white sandy seashores and turquoise seas, the Maldives has all the time billed itself as a high vacationer vacation spot.

But the coronavirus pandemic introduced the worldwide journey and tourism trade to a grinding halt final 12 months, forcing the island-nation to step up financial diversification efforts by increasing different sectors.

Tourism accounts for over 28% of gross home product within the small archipelago and brings in about 60% of overseas change receipts, in accordance to the Michigan State University.

“As an economy heavily dependent on international tourism, the restrictions on global travel and other protective measures against the Covid-19 pandemic have had significant impact on the Maldives,” President Ibrahim Mohamed Solih informed CNBC in a current interview.

The closing of borders meant that vacationer arrivals was successfully nil throughout that interval, a primary since modern-day tourism started within the late 1970s.

Ibrahim Mohamed Solih

President, Maldives

The Maldives final 12 months closed its borders between March to July, which briefly shut down the tourism sector that resulted in 1000’s of employees being laid off. Some of them misplaced their jobs completely. It led to a drastic shortfall in overseas change receipts that the Maldives depends on to pay for imports.

“The closing of borders meant that tourist arrivals was effectively nil during that period, a first since modern day tourism began in the late 1970s,” Solih mentioned by e-mail.

Last 12 months, the Maldives welcomed a little bit over half-a-million vacationers. That’s a 67.4% plunge in vacationer arrivals from 2019, which noticed 1.7 million guests come by.

Diversification

Still, greater than 19,500 folks within the nation — or a little bit beneath 4% of the inhabitants — have examined optimistic for the coronavirus and 61 of them died, in accordance to Johns Hopkins University information.

While the tourism sector recovers, the Maldives can be working to enhance different sectors of the economy, in accordance to Solih.

“We’re currently working on economic diversification through expanding the fisheries and agricultural sectors, establishing a decentralized network to provide public services,” he mentioned.

The president added that the nation can be engaged on initiatives that think about Maldives’ nature conservation and local weather motion.

Tackling local weather change is excessive on the federal government’s agenda as rising sea ranges pose bodily vulnerabilities to the island-state.

Economic measures

Solih mentioned his authorities responded to the financial disaster by varied measures together with earnings assist, loans for struggling companies with interest-free grace interval, and the delay of debt funds for people, households and firms.

The Maldives acquired non permanent suspension of its debt-service funds owed to collectors by the G-20’s Debt Service Suspension Initiative till the center of this 12 months. It was additionally granted debt moratorium by different main growth companions that allowed the federal government to redirect $24 million to its Covid response efforts, in accordance to the president.

“We are in ongoing discussion with creditors to seek additional debt service suspensions where possible,” Solih mentioned.

Still, fiscal deficit stays some extent of concern. Ratings company Fitch downgraded the Maldives from “B” to “CCC” in November and mentioned it expects a pointy enhance within the nation’s debt burden due to the Covid shock and continued debt-funded infrastructure spending.



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