‘COVID-19 has brought out peculiar vulnerabilities in the Maldives’
When the world’s wealthiest and most powerful countries are struggling desperately in the face of the coronavirus ( COVID-19 ) pandemic, the fight cannot be easy for a small country like the Maldives, that is home to about 4 lakh people. Particularly when tourism, the mainstay of its economy, is devastated. The scenic Indian Ocean Archipelago has put all its might into strategically responding to the health emergency, braving a cash flow crisis and at times, taking ‘difficult decisions’. An economic relief package in the region and targeted assistance will be crucial to tiding the crisis, MaldivianForeign Minister Abdulla Shahid tells The Hindu in an email interview. Edited excerpts…
How is the Maldives dealing with COVID-19? Cases have been going up.
As of 15: 00 hours on May 1, we have 468 confirmed positive cases, of which 17 have fully recovered. This includes 145 Maldivians, and 323 foreigners. They are from Bangladesh, India, Italy, Pakistan, Sri Lanka, Nepal and the U.K. Unfortunately, there has been one death, of an 83-year old woman. We saw the highest number of confirmed cases recorded – 107 – in a single day on April 30.
The government is isolating all positive cases in dedicated isolation facilities. The government is also taking into quarantine, the direct contacts of all positive cases. Elderly persons who are more vulnerable are being kept in the dedicated hospital facilities in Malé. Contact tracing is being done extensively. For this, the Health Protection Agency has also launched an application which enables community-led contact tracing.
You have a National Task Force on Covid-19 chaired by President Ibrahim Mohamed Solih. What is its strategy to contain the spread of the virus?
All our key stakeholders have worked together since the beginning of the first reports [of COVID-19] from late January. All relevant stakeholders held daily briefings since then, to gather information, assess preparedness, identify areas where we needed to do more work, and identify SOPs and make plans.
And on March 3, the National Emergency Operations Centre [NEOC] was established under the instruction of President Solih, which means that the National Disaster Management Authority and the Ministry of Health now work collaboratively to address this pandemic. The NEOC officials meet every morning and afternoon, to track progress, identify response and collect feedback. This operation is given policy direction by the President, who meets all key stakeholders every evening, so that key decisions are made quickly, based on the latest information. The policies are driven by the advice of the Technical Advisory Group and the medical experts.
The strategy has always been to manage the spread of the virus, to allow to build health sector capacity to deal with increased cases. The dispersed islands make it easier for us to isolate communities whenever there is a suspected case. And this has been the strategy.
In the Maldives, the challenge has always been that in the event of a major breakout, our health services would be stretched immensely. But when a person tests positive, especially in outer islands, and needs to be given specialist care, the person has to be transported to the capital city. This is very costly and puts enormous pressure on the overstretched health care facilities. This shortage of healthcare professionals and especially specialist doctors is felt more acutely in such a crisis.
While the country recorded its first case in March, preparations and precautions had started weeks ago, when the first cases of COVID19 were reported globally. We made very difficult decisions, early on, as precautionary measures. For example, we temporarily suspended direct travel from China on February 4, 2020. As you know, China is our biggest source market for tourism, and this was in the middle of the peak season.
Since then, we suspended travel from other hotspots, such as Iran, some parts of the Republic of Korea, Germany and France, Italy, Bangladesh, Malaysia and the UK. And on March 27, Maldives stopped issuing on-arrival visa – which effectively stopped the tourism industry. On March 12, the Minister of Health, using discretionary powers vested in the Minister, declared a State of Public Health Emergency for a period of 30 days.
This emergency has now been extended until May 31. We started public awareness campaigns from the beginning, targeting all aspects of the population. We conducted training for all frontline workers and related areas such as airports, resorts, ports, and awareness sessions for public sector officials, migrants and so on. We also started active engagement against misinformation.
The virus was first reported in one of the atolls, among visiting tourists, and has now reached capital Male, a very dense city. How are you arresting the spread?
We had managed to prevent community spread for over a month, until we found the first positive case in Malé city on April 15. Since then, the rate of spread has escalated significantly. In the past 15 days alone, 448 cases have been confirmed (an average of 29.9 cases per day).
So, the numbers are increasing quite rapidly. We are now dealing with containing the spread of the virus, in our largest population centre. Cases have also been found outside of Malé, but connected to clusters in this region.
Malé city has been under lockdown since April 15. The lockdown has been extended until May 14. This is, as you can imagine, a challenging situation. This city is one of the most congested areas in the world, with a large population of migrant workers as well.
Ensuring that services and goods are available for the over 1,00,000 Maldivians and an equal number of migrant workers living in Malé city region, has been a challenge, as distribution services relying on e-commerce is not common. But citizens, service providers and traders have risen to the challenge, and largely the processes are functioning.
The virus has now been confirmed in the expatriate labour population. In the Maldives, migrant workers have been compelled to live in cramped living conditions, and this has proven to be a fertile breeding ground. Malé is also the centre of commerce, for the entire nation. It is also Ramazan. So, this is a challenging time for the people. But all in all, the people are responding well to the measures put in place, and with that we are able to take the necessary measures, overwhelming as they may be.
The Maldives’s primary revenue-earning tourism sector is affected very badly. Imports must also be hit. What are the options you are looking at to revive your economy? Is food security a concern?
While we have had the first case on March 7, the first casualty of this pandemic in the Maldives is the economy.
Our economy is heavily dependent on tourism. And the disruption in global travel and connectivity has resulted in the closure of the entire industry. And falling demand, and resulting decline in price for fish globally, has impacted the fisheries sector, which is our second largest economic sector. The Maldives imports nearly everything, from basic staple food, to luxury goods, to everything consumed in the tourist resorts. We pay for these imports from hard currency earned from tourism and fish exports.
Last year, we projected a rise of 8 % in tourist revenues. Revenue generated by the tourism industry account for over 70 % of the country’s GDP. Now, tourist arrivals are expected to decline by 50 %. The sharp reduction in tourist arrivals this year and shutting down of the tourism industry have brought a cash flow crisis to the government.
Currently we are facing a revenue shortfall of up to US $908 million. It is also estimated that the country will face a foreign currency shortfall of up to US $450 million. Almost the entire government revenue is being directed to the health emergency. And we might be in a position where we would have run out of funds, and our resources depleted.
We have been working on how we can address this shortfall. The government has taken a number of measures, in an effort to reduce expenditure by US $64.7 million (MVR 1 billion). This includes reducing salaries of all political appointees, heads and staff of state-owned enterprises, by 20 %.
Parliament has also approved a 20 percent pay cut on their member’s salaries as well. The government has also introduced a financial stimulus package with US $161.9 million (MVR 2.5 billion) intended to prevent the closing down of local businesses and the loss of jobs.
We have also reached out to multilateral agencies, international financial institutions and also our bilateral partners for support, and we are confident that we will be receiving such support. With this support, and with the financial stimulus package, the government intends to focus on reducing unemployment, ensuring that the vulnerable population is protected with necessary safeguards, keeping businesses afloat, ensuring that large projects are progressing, so that the economy is running. We plan to open up the country for tourism at the earliest, and with aggressive marketing, attract tourists and travellers to our shores.
The Maldives has been working on restructuring its external debt, including the nearly $1.4 billion owed to China. How does COVD-19 impact your engagement with bilateral and multilateral donors?
The Maldives has been very fortunate in its friendships, as we have a number of trusted partners and friends. India is one such partner and friend. India has helped to evacuate nine Maldivians from Wuhan, China. It has donated three months’ worth of essential medicines to the Maldives.
We were one of the first recipients of a composite medical team that supported our local efforts, and shared their experiences with us. And India has also helped to airlift 6.2 tonnes of medicines procured by the Maldives, but that is stuck in India due to the restrictions in movement. India has also assured of undisrupted supply of essential commodities such as rice, sugar, flour and cement during this pandemic. India has also granted special permissions to operate cargo flights to bring food and other supplies, as Maldives is an import-dependent country. It has also granted permissions for us to evacuate our citizens.
Just this week, the Maldives received $150 million from the $400 million currency swap agreement signed between the Maldives Monetary Authority and the Reserve Bank of India in July 2019. This currency swap agreement was part of the financial package extended from India to the Maldives, during the state visit of President Solih in December 2018.
On debt, the Government has set in place a debt sustainability strategy since early 2019, and has been pursuing its borrowing, revenue generating, and expenditure policies based on the strategy. However, the unexpected and sharp decline in Government revenue because of COVID-19 will impact the previous forecasts and the current debt sustainability strategy, and the Finance Ministry will be making the necessary adjustments as required. We have to continue honouring repayments, even though we are not being able to meet the day-to-day operational cost of the Government, because of cash flow shortages.
Speaking to The Hindu recently, Sri Lanka’s former PM Ranil Wickremesinghe has proposed a SAARC Secretariat-led regional response to COVID-19, to create jobs, resurrect tourism in the region and collectively negotiate big debt in the international money market. How does the Maldives view the prospect for regional collaboration during this pandemic?
The Maldives is, and has always been a firm believer of strong regional cooperation, especially in the face of adversity, such as the one we are facing now. This is why in 2003, when the region was grappling with the highly infectious disease SARS, the Maldives convened an emergency meeting of the SAARC health ministers on the SARS Epidemic, in the Maldives. This is also why we welcomed Prime Minister Narendra Modi’s invitation for a regional initiative to combat COVID19. We took part at the highest level in that meeting and have since taken part in a number of regional meetings of health and trade officials hosted by different countries and organisations.
In regard to a common regional strategy, we suggest creating a space for closer cooperation be created among the health emergency agencies to ensure that the countries in SAARC have unhindered exchange of information about the virus and best practices.
Secondly, because the economic impact of this pandemic on our region will be immense, to formulate an economic relief package, targeted at the affected countries. In the case of the Maldives, such a package would include budget support to fill the significant shortfall in revenue gap.
Third, to start discussing a long-term recovery plan for the region. For the Maldives, such a plan means initiating a quick recovery in the tourism sector. It means building up our resilience through sustainable regional development and connectivity between the Maldives and major cities in the region. It also means scaling up private investment in tourist resorts and infrastructure that propels growth in tourist arrivals, which, in the Maldives means, economic growth.
We welcomed Prime Minister Modi’s proposal to create a COVID-19 Emergency Fund, based on voluntary contributions, and India’s pledge to contribute 10 million USD as a start. We think this would be very useful to help SAARC nations meet the cost of emergency actions to combat this pandemic. We welcome all the other voluntary contributions made by all countries to the Fund. We believe there is much to be gleaned from a regional approach, and we hope that we can take this forward.
While the entire world is experiencing a shared crisis, countries have peculiar challenges and advantages. What in your view are the Maldives’s?
This crisis has brought to the fore the particular vulnerabilities of the Maldives, as never experienced before. The Maldives economy depends almost entirely on tourism. Almost every employment generating activity in the country is, to some degree, related to, or dependent on tourism. With no tourist arriving in the country since March, there in fact is, no tourism industry in the Maldives at the moment.
All our staple food, medicine, medical equipment, and other essential supplies are imported. The severe disruption in global supply chains has exacerbated already volatile markets, thus, making our plight even more desperate. This is the case with many Small Island Developing States (SIDS).
SIDS, due to their smallness, remoteness, and limited connectivity to global supply chains, are incredibly vulnerable to external shocks - a fact underlined by the United Nations in several key outcome documents on sustainable development.
For the Maldives, this health crisis has a multiplying effect on its economy, on its ability to respond, and its ability to overcome. This crisis requires targeted assistance, especially towards low-income countries, and countries in special situations such the SIDS. This assistance could be in the form of easier and affordable access to financing, including through the creation of special windows for SIDS in lending programmes of international financial institutions, as well as debt relief for economies worst hit.