Emergency measures to shore up the economy through the Covid-19 crisis were unveiled last night.

The assistance programme includes $12 million from the Government to back loans and grants for small and medium-sized businesses, administered through the Bermuda Economic Development Corporation.

Curtis Dickinson, the finance minister, warned the economic impact of the coronavirus would dwarf the hit sustained by Bermuda in the global recession of more than a decade ago.

He said early projections showed a 7.5 per cent to 12.5 per cent contraction in the economy over this financial year, instead of the 1 per cent to 2 per cent growth that had been forecast before the crisis.

Mr Dickinson added: “Predicting the exact scale of the economic damage at this point is difficult due to continuing uncertainties.”

He said that the island’s economy had shrunk 5.6 per cent in 2009 because of the global financial crisis. He added “In line with most other countries, we expect the contraction in the Bermuda economy in 2020 to be worse than in 2009.”

Mr Dickinson said the ministry had asked for independent economic modelling to assist the recovery. Mr Dickinson said a $20 million credit line had been negotiated with an island bank and another $150 million loan was being finalised.

He added the Government’s next steps included a freeze on capital projects that had yet to start, which would save $10 to $15 million, as well as the axing of funding for non-urgent vacancies in the Civil Service.

Mr Dickinson said he would set up a Covid-19 Economic Advisory Committee to advise on economic regeneration and would create a form on the Government’s website to ask for public views.

He added: “Our economy will change and the Government will change to take the challenge head on to create outcomes that benefit the people of Bermuda.”

Erica Smith, executive director of the BEDC, said help was on its way for existing clients and new entrepreneurs.

Ms Smith said $1 million would be available for direct lending from the BEDC.

She added: “We’ve also increased our guarantee to $12 million to issue guarantees to financial institutions for bank financing.”

Ms Smith said an extra $100,000 had been earmarked to give businesses access to external legal and marketing services to help “right-size these businesses once Covid-19 passes”.

She added the BEDC was setting up an “idea pool” for businesses to send suggestions and would act as an intermediary to connect businesses with buyers and to help businesses share resources.

Micro loans have been increased from $20,000 to a maximum of $30,000 — direct loans that did not need any collateral or security.

Ms Smith said the BEDC’s interest rates had been cut by 1.5 per cent, to 3 per cent and 3.5 per cent, which was “the most affordable money on the market right now”.

She added the new rate applied to Economic Empowerment Zones as well as “general businesses island-wide”.

Ms Smith said existing micro loans had been restructured with interest-only payments and that, for the first time, the BEDC would consider guarantees for finance from “other entities” outside financial institutions, such as “individuals, private entities, credit unions, or companies who are willing to allocate lending towards businesses”.