On Wednesday June 17, Madagascar announced a stimulus package offering close to a million small businesses secure loans at below market rates to help deal with the impact of the coronavirus outbreak.

Madagascar’s President Andry Rajoelina released a total of 280 billion Ariary ($73 million) in three loan tranches with interest rates ranging from 4.97 percent  to 9 percent and repayment periods of 6-24 months.

According to the government, this provides a reduced interest rate compared to the commercial bank interest rates which ranges from 20 percent to 40 percent.

“Over 980,000 businesses including small farmers, agricultural distributors, and those in the tourism, commerce, crafts and manufacturing sectors will be beneficiaries of the loan,” the government said.

So far the Indian Ocean nation  has recorded 1,378 cases of COVID-19 and 12 deaths.

In curbing the spread of the virus in Madagascar, President Rajoelina issued a lockdown in April, which resulted in the shut down of businesses, schools, organizations, tourist locations and places of worship.

However, the pandemic has had an impact on the country’s economic stand. Before the lockdown, Madagascar’s economy was projected to increase to 5.3 percent in 2020, from public investments, including road, health and education infrastructure.

Countries such as China, Italy, the United States and France, which are the most affected by the pandemic, are those with which Madagascar has the strongest trade links. In 2019, exports to these four countries accounted for 46 percent of Madagascar’s total exports and 33 percent imports.

The informal sector, which employs more than nine out of ten workers and contributes to 24 percent of the country’s GDP has also been affected by this crisis.

Nevertheless, the new government approved loans will help cushion the impact of the virus as well as promote sustainable growth for Madagascar.