The International Finance Corporation is to invest up to USD 50 million at the Bank of Maldives (BML), in support of the country’s tourism sector.
A member of the World Bank Group, IFC is investing the hefty amount in the country’s national bank, to support private sector companies as well as Small and Medium Enterprises in the industry. This is being done to help preserve jobs and help recovery the country’s economic growth, which was hit hard by the ongoing Covid-19 pandemic.
A statement released on Wednesday reads that the investment is set to be released three tranches.
The first tranche includes USD 20 million and was approved on Wednesday.
The aid is in light of the corporation’s first phase of support for countries facing the Covid-19 crisis and will allow BML to extend the “much needed” working capital finance.
This is expected to benefit businesses, employees and suppliers in industries related to the tourism sector.
Talks are underway to mobilize an additional USD 50 million in loan to support BML, however, this had not been confirmed yet, reads the statement.
As the largest bank in the country and the leading lender to the tourism industry, BML has already designed a short-term financing program to support severely affected businesses, providing working capital to resorts and guesthouses to help tide them through the pandemic,”Timothy Sawyer, CEO and Managing Director of BML
Tourism contributes over two-thirds of the GDP, 80 percent of exports, 40 percent of revenue and has been one of the main pillars in upholding the country’s healthy economic growth for a long time.
Even before the Covid-19 pandemic was discovered in the country, Maldives tourism was impacted heavily, having come to a complete halt when the government decided to close the country’s borders on March 27.
The statement goes on to read that the island nation is likely to be “one of the hardest hit” countries in South Asia, with a 13 percent plunge in growth, predicted for the year.
A recent report by the United Nations Development Programme (UNDP) and Ministry of Economic Development reveals that 22,000 local resort employees have been directly affected as a result of the pandemic’s impact.
“We recognize that efforts to revive tourism, which is the backbone of the Maldivian economy, are now at a critical point and require a coordinated, flexible and fast response, IFC’s financing for the Bank of Maldives will help support the reopening of the country’s largest industry and fund the Bank’s small and medium sized enterprise value chain. We are prepared to do more to assist as the country moves from recovery to rebuilding. IFC stands with the Maldives at a time when it matters the most"Amena Arif, IFC Country Manager for Maldives and Sri Lanka
Further, IFC stated that tourism is a strategic priority for IFC in the Maldives because of the strong development impact it brings to the economy. It’s strategic approach in the Maldives focuses on supporting inclusion, sustainability, and connectivity by addressing the Maldives biggest development gaps through private sector solutions.
