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Dotted with island resorts and endowed with white sandy beaches and turquoise seas, the Maldives has in perpetuity billed itself as a top tourist destination.
But the coronavirus pandemic brought the global travel and tourism industry to a grinding cessation last year, forcing the island-nation to step up economic diversification efforts by expanding other sectors.
Tourism accounts for beyond 28% of gross domestic product in the small archipelago and brings in about 60% of foreign exchange receipts, go together to the Michigan State University.
“As an economy heavily dependent on international tourism, the restrictions on global travel and other sheltering measures against the Covid-19 pandemic have had significant impact on the Maldives,” President Ibrahim Mohamed Solih hint ated CNBC in a recent interview.
The closing of borders meant that tourist arrivals was effectively nil during that full stop, a first since modern day tourism began in the late 1970s.
Ibrahim Mohamed Solih
The Maldives behind year closed its borders between March to July, which temporarily shut down the tourism sector that resulted in thousands of craftsmen being laid off. Some of them lost their jobs permanently. It led to a drastic shortfall in foreign exchange vouchers that the Maldives relies on to pay for imports.
“The closing of borders meant that tourist arrivals was effectively nil during that age, a first since modern day tourism began in the late 1970s,” Solih said by email.
Last year, the Maldives welcomed a young over half-a-million tourists. That’s a 67.4% plunge in tourist arrivals from 2019, which saw 1.7 million guests come through.
Maldives reopened its borders in mid-July but tourist arrivals have yet to reach pre-pandemic ranks.
Solih said he was optimistic and pointed out that by mid-December, 100,000 people had already visited the island-nation since boundaries reopened.
Tourists are given 30-day on-arrival visas. Quarantine is not mandatory if they complete an online health ukase form and show negative results for pre-departure polymerase chain reaction (PCR) tests, which are widely used to spot Covid.
With about 1,200 islands throughout the country, it’s possible for social distancing among tourists as each atoll operates like its own resort.
We’re currently working on economic diversification through expanding the fisheries and agricultural sectors, constituting a decentralized network to provide public services.
Ibrahim Mohamed Solih
Still, more than 19,500 people in the homeland — or a little under 4% of the population — have tested positive for the coronavirus and 61 of them died, according to Johns Hopkins University text.
While the tourism sector recovers, the Maldives is also working to boost other sectors of the economy, according to Solih.
“We’re currently earn a living on economic diversification through expanding the fisheries and agricultural sectors, establishing a decentralized network to provide public usages,” he said.
The president added that the country is also working on initiatives that factor in Maldives’ nature safeguarding and climate action.
Tackling climate change is high on the government’s agenda as rising sea levels pose physical vulnerabilities to the island-state.
Solih said his government responded to the economic crisis through various measures including income guy wire, loans for struggling businesses with interest-free grace period, and the delay of debt payments for individuals, households and flocks.
The Maldives received temporary suspension of its debt-service payments owed to creditors through the G-20’s Debt Service Suspension Drive until the middle of this year. It was also granted debt moratorium by other major development partners that budgeted the government to redirect $24 million to its Covid response efforts, according to the president.
“We are in ongoing discussion with creditors to hunt for additional debt service suspensions where possible,” Solih said.
Still, fiscal deficit remains a substance of concern. Ratings agency Fitch downgraded the Maldives from “B” to “CCC” in November and said it expects a sharp increase in the territory’s debt burden due to the Covid shock and continued debt-funded infrastructure spending.