Regions and Countries

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p. 6 of 19 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Maldives : I. Country Performance Assessment

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E. Implementation Assessment

1. The Portfolio

17. To date, the ADB has approved nine loans from its Special Funds resources to Maldives for a total of $55 million, mainly focusing on improvement of power supply and port facilities in Malé. Three loans have been provided in each of the transport and the energy sectors, and one loan each for the education, regional development and multi (mainly energy and ports) sectors. Of the six completed projects, four have been post-evaluated. Three were rated generally successful with notably good project design. The one unsuccessful project was Loan 513-MLD: Interisland Transport Project, approved in 1981 for $1 million. It suffered from major project design flaws. The 37 TAs ($12.6 million) provided by ADB have had a wider sectoral coverage than the loan program, and included assistance for national planning, financial sector development, and improved public sector management and good governance. Ten TAs were for the preparation of loan projects and 27 TAs were for advisory activities. Overall, the Maldives has made good use of ADB assistance and has satisfactory absorptive capacity (Appendix 2).

18. Past ADB lending operations have been instrumental in the development of high priority infrastructure, i.e., power supply and ports. ADB assistance enabled a reliable electric power supply and significantly improved port operations in Malé. ADB assistance has also supported human development and institutional capacity building in these two sectors, as the shortage of technical experts in engineering, finance, accounting, planning and management has been a key constraint. The corporatization of the public power utility (State Electric Company Ltd.) in 1997 and the Maldives Port Authority (MPA), being implemented in 2000, were among significant achievements. Recent ADB lending operations put emphasis on more equitable growth across atolls through the promotion of regional development. The Regional Development Project¹⁰ in 1999 is the first project that directly promotes the Government’s strategy for regional development through the provision of basic infrastructure and services and institutional support.

19. ADB technical assistance has also been provided in the area of development planning and this has helped the Government identify key development issues and formulate medium- and long-term national plans. These plans have guided economic and social development planning and have also provided a consistent policy framework for identifying development priorities. In recent years the ADB's TA program has been effective in assisting the Government to:

1. develop national accounting skills;

2. strengthen the operational efficiency of the Audit Office and enhance capacity of public accounting system;

3. improve institutional arrangements for the postsecondary education system;

4. promote private sector participation in port operations;

5. strengthen legal education and judicial training; and

6. develop science and technology masterplan.

2. Issues in Project Implementation

20. The ADB's loan portfolio in Maldives comprises only three active loans, as a result of which disbursement ratios tend to vary depending on the stage of project implementation. However, past implementation experience indicates delays have occurred primarily in the initial phases of project implementation in the appointment of consultants, procurement, and contract award. Procurement for public sector project following international competitive bidding was institutionalized only in 1997, when a committee was formulated consisting of staff from Ministry of Finance and Treasury, the Audit Office, and the concerned project agency to undertake preparation of bid documents and tender evaluation. The lack of qualified and experienced technical staff in the procurement committee has so far resulted in heavy reliance on international consultants for procurement work. The current practice is neither cost-effective due to the high costs of contracting consultants nor sustainable as the Government has limited involvement in and understanding of the required legal and technical specifications of the tender document. Accordingly, a small-scale technical assistance for Procurement Support and Project Management is included in 2000, to strengthen the capacity of procurement staff in preparation of bidding documents, evaluation of tender documents and project management and monitoring, to enhance the effectiveness of Government procurement procedures.

21. The recent adoption by ADB of Performance-based Allocation (PBA) system is aimed to:

1. promote aid effectiveness and aid-selectivity;

2. provide input to ADB’s poverty reduction strategy;

3. support good governance among borrowers;

4. carry out significant policy dialogue;

5. highlight achievements in borrowers’ economies; and

6. benchmark ADB’s graduation policy.

22. PBA, as being currently designed, uses both top-down and bottom-up approaches in evaluating country performance. Common standardized criteria across all borrowers comprising, e.g., economic growth, or monetary policy stance, is an example of a top down criteria; while specific tariff adjustment, or a specific policy reform in borrower’s economy, or portfolio management would be examples of a bottom-up approach. Under the proposed system, country specific allocation will depend upon the borrower’s per capita gross national product (GNP), the size of its population, and performance of its economy. The factors that will be critical in determining country specific performance in Maldives relate to:

1. macroeconomic management;

2. structural policies;

3. poverty reduction policies;

4. protection of environment;

5. governance and public sector management; and

6. portfolio performance.

At the same time, it should be noted that Maldives will be treated as special case together with the Pacific developing member countries for the relatively small size of the country and the vulnerability of its economy to external shocks.

23. The development of specific indicators to measure country performance is expected to be complete by the end of 2000, in extensive consultations with key Government agencies, policy institutes, and other donors. While some criteria are based on objective quantitative indicators and some others are subjective in nature, the PBA assessment is also based on both immediate past performance and the promise of future performance.

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