ali hashim : current state of the maldives ’ economy and outlook remarks by mr ali hashim, governor of the maldives monetary authority, at the press conference, male, 22 august 2021. * * * a very good afternoon! let me first and foremost, warmly welcome you to the maldives monetary authority and thank you sincerely for accepting our invitation by being here today. it always gives me great pleasure to engage and interact with the hard - working journalists of the maldivian press and media community. i would like to take this opportunity to say a few words about the current state of the economy, our outlook going forward, and the work being undertaken by the mma to ensure that the economic recovery stays on track. as we all know, the maldives is one of the most affected economies due to the covid - 19 pandemic, with an estimated gdp contraction of 32 % in 2020. nearly all major economic sectors, including tourism, construction, transport, communication, and the trade sector recorded negative growth numbers due to the dampening effects of the lockdown and concurrent border closure during the 2nd quarter of 2020. the bank intervened at the beginning of the crisis, actively providing liquidity support to the banking sector to mitigate adverse economic impacts. with the strong tourism sector recovery in recent months, the foreign exchange ( fx ) liquidity position of the banking sector has since improved. in order to ensure an adequate fx buffer, we have established and continue to maintain bilateral liquidity arrangements with other central banks. despite the very trying and challenging circumstances we faced in 2020, the maldives is also among the quickest to rebound from the crisis. the tourism sector, which accounts for an estimated 26 % of real output, has significantly exceeded expectations when compared to initial forecasts for the first half of 2021. this recovery is expected to continue over the medium - term and support the recovery of other economic sectors. other important sectors of the economy continue to rebound as well. the quarterly national accounts for the 1st quarter of 2021, indicates a quarterly gdp growth rate of 34. 4 % compared to the preceding 4th quarter of 2020. most major economic sectors registered positive growth numbers. while we anticipate a slight dampening in the growth prospects for the 2nd quarter of 2021 due to the second lockdown and travel restrictions imposed earlier this year, the revival of economic activity in general and the tourism sector in particular since then, gives us cause for optimism for 2021 as a whole. july 2021 was a particularly good month for tourism with

, shoddy infrastructure, or poor transparency. the more successful policymakers are in ensuring that liquidity generation is robust, the more efficient we can be with respect to the amount of capital required to protect against that risk. against this backdrop, the g - 20 ’ s priorities should become clearer. in particular, the g - 20 is pursuing three main strategies to reduce systemic risk : improving the resiliency of financial institutions ; enhancing the robustness of financial markets ; and, reducing the interconnectedness between institutions and between institutions and markets. all are necessary, as the measures are mutually reinforcing. allow me to expand. improving the resiliency of financial institutions creating more resilient institutions requires more and better capital, improved balance sheet liquidity, and enhanced risk management. the crisis clearly underscored the need to better for example, in mark - to - market accounting, illiquidity discounts can be quickly translated into accounting losses that can impair the reported capital position of a financial institution. j. selody, “ the nature of systemic risk, ” forthcoming, in managing risk in the financial system, edited by j. r. labrosse, r, olivares - caminal and d. singh. ( cheltenham : edward elgar, 2011 ). capture counterparty exposures, market risk, and a host of contingent claims. the so - called basel iii proposals address many of these issues. 4 the most important elements are to : create global standards for liquidity of sufficient rigour to allow our financial firms to withstand future volatility in the global financial system. raise substantially the quantity, quality, consistency, and transparency of the tier 1 capital base. it is essential that this is true loss - bearing capital, which means that it must be predominantly tangible common equity. introduce a leverage ratio as a complement to the basel ii risk - based framework. the leverage ratio should be simple to calculate and non - binding in normal states. in effect, it is a safety harness that is designed to protect against risks that regulators think are low but which, in fact, are not. introduce a capital buffer above the minimum capital requirement in order to ensure that banks and supervisors take prompt corrective action before bank capital levels fall below the minimum. it would appear reasonable that this buffer should be large enough to absorb the losses of the last crisis. it could also vary over time so that it is at its maximum in periods when credit is growing rapidly and system