The rapid spread of the COVID-19 pandemic is expected to sharply reduce the GDP growth of Maldives for 2020, due to its adverse effect on the tourism and other sectors of the economy.
The MMA stands ready to implement the various policy instruments and measures at its disposal, in order to mitigate the impact of the COVID-19 on the financial system and exchange rate stability. The MMA has also met with the banks to discuss the impact on the domestic financial system and has identified the measures that can be taken to address these in a timely manner. The MMA is also exploring the measures that can be taken through the financial institutions to provide support to those affected by the crisis, thereby minimizing layoffs. Depending on the need, the MMA also plans to provide liquidity support to banks. Measures decided by the MMA in this regard are as follows:
1- the necessary regulatory measures to facilitate a moratorium of 6 months on loan repayments for those impacted by the current situation (customers have to submit their requests to the banks in order to avail themselves of this moratorium)
2- reduction of the Minimum Reserve Requirement (MRR) up to 5% to provide liquidity support to banks, as and when needed
3- make available a short-term credit facility to financial institutions as and when required
4- increase in the MMA’s foreign exchange intervention and use other available facilities to maintain the exchange rate peg
5- obtain a foreign currency swap facility amounting to US$150 million under the currency swap agreement signed between the MMA and the Reserve Bank of India (RBI) and
6- jointly with the Ministry of Finance, requested financial assistance from the IMF
The MMA in coordination with government agencies and banks has taken the necessary arrangements to provide banking and payment services by the MMA during this period where Government offices are closed. In this regard, the MMA will continue to provide banking and payment services on March 19, 23 and 26. Arrangements have also been made to provide cash to the public.
The MMA will continue to closely monitor future developments and will take the necessary actions to support economic activity.