The International Monetary Fund (IMF) has approved the disbursement of US$28.9 million to the Indian Ocean tourist paradise in the wake of the COVID-19 pandemic.

The funds will be drawn under the Rapid Credit Facility (RCF) to help cover balance of payments and fiscal needs, stemming from the COVID-19 pandemic, said IMF.

IMF said global and domestic containment measures are leading to a substantial reduction in economic activity, with sectors such as tourism, transport, and construction hit particularly hard.

As a result, the short-term economic outlook has deteriorated significantly, with large uncertainties surrounding the duration of the pandemic and the timing of the recovery of tourism, said IMF.

The World Bank had previously extended assistance of US$ 10 million, and the European Union had contributed an additional EUR 3 million in response to the pandemic. The government is in discussion with ten international financial institutions to secure US$ 215 million.

The state revenue expected to be generated this year is MVR 12 billion. Authorities have estimated that the tourism revenue this time due to the virus will decline by 50 percent.