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Countries and Regions Country Partnership Strategies Document
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Country Strategy and Program Update 2002-2004: Maldives
Executive SummarySustained Development. The Republic of Maldives consists of about 1,200 small, lowlying coral islands, including 199 inhabited by about 270,000 people, of which a quarter live in Malé. The Maldives has no known mineral resources and the potential for agriculture is limited. The Maldives is politically stable and has recorded impressive achievements in social development. Since the mid-1980s, more than a decade has been added to its peoples’ life expectancy. By the first half of the 1990s, more than three quarters of the population had access to modern health care services and nearly half of the school-age population were enrolled in secondary school. The Maldives ranks highest among all South Asian countries on the United Nations Development Programme’s gender development index. The economy has achieved high growth of 7.4 percent annually since 1991 and per capita gross domestic product (GDP) increased from $1,636 in 1995 to $2,049 in 2000. The economy has been led by the tourism and fisheries sectors, but recently became less reliant on fisheries. The county has an acute shortage of skilled labor, which is offset by employing foreign workers. Reflecting social and economic achievements, the Maldives’ official status under the United Nations classification may be upgraded from a least developed country (LDC) to a developing country in the near future. However proposed graduation from LDC status may prove difficult given the country’s high poverty incidence and vulnerability to macroeconomic shocks. The Poverty Reduction Challenges. While the Maldives has posted impressive improvements in key social and economic indicators, poverty reduction remains at the center of the Government’s long-term vision and midterm strategies. Abject poverty and severe malnutrition are almost nonexistent, but a large segment of the population subsists on very low incomes. According to a 1998 survey, 43 percent of the population subsist on per capita income of Rf15 ($1.3) per day or less. Around 30 percent of the atoll population (people not living in Malé) report no or inadequate access to essential drugs and around one half of the atoll population live on islands without health and sanitary infrastructure. One in eight people depends on untreated well water and one in four of the atoll population experiences either periodic or severe shortages of drinking water. More than 90 percent of the households living below the poverty line reside in the atolls. Income disparities are about 2.5:1, and access to social and physical infrastructure and services averages 4:1. This regional disparity between Malé and the atolls is the single most important poverty concern. Key factors, among many that contribute to poverty, include vulnerable economic structure, physical and information isolation, limited institutional capacity, weak education, skill shortages, poor quality of electricity, lack of access to term lending, and malnutrition. ADB’s Medium-Term Country Strategy, 2002–2006. The President’s Vision 2020 and the Sixth National Development Plan (6NDP) are the basis of the Maldives country strategy of the Asian Development Bank (ADB). The imperatives of ADB’s long-term strategic framework and poverty reduction strategy are considered in refining ADB’s midterm strategy. Coordination with other development partners is also incorporated under poverty reduction as the underlying common thrust. The Maldives’ long-term vision is to establish a democratic, top-ranking, middle-income country by 2020. Consistent with the vision, the medium-term development objectives and priorities of the 6NDP (2001–2005) are to (i) eradicate poverty and ensure equitable distribution of benefits from economic development; (ii) ensure macroeconomic stability and promote economic diversification and growth; (iii) enhance and strengthen private sector participation in national development; (iv) accelerate regional and atoll development to remove disparities in employment opportunities, economic benefits, and basic social services; (v) ensure good governance through land, legal, and judicial reforms, and efficient public administration; and (vi) strengthen social harmony and fortify national unity and religious values. The policy design of the 6NDP is, therefore, structured around the following three themes derived from these objectives: (i) sustaining economic growth, (ii) developing and implementing a social agenda to promote equitable development and poverty eradication, and (iii) effectively implementing the 6NDP by improving participative governance. ADB’s future operational strategy for the Maldives will support poverty reduction through a combination of pro-poor growth, social development, and good governance initiatives. To foster pro-poor growth, ADB will assist in (i) developing the region, including the provision of basic infrastructure and capacity building; (ii) creating an enabling environment for private sector development, including reform of the financial sector and the legal system; and (iii) developing an information and communication network in the atolls. To raise the level of social development, ADB will provide assistance for postsecondary education and skills development. To support good governance, ADB will (i) develop improved information access and public sector connectivity, and build the capacity of key public institutions with the aim of improving public sector management efficiency; and (ii) assist the Government to facilitate private sector operations and to prepare for the likely exigencies posed by eventual graduation from LDC status. Thematic issues such as environmental sustainability, and gender and development will be mainstreamed into ADB’s investment operations. ADB’s Three-Year Program, 2002–2004. From 2002, ADB will also allocate Asian Development Fund resources using the performance-based allocation (PBA) system. The Maldives’ indicative base case annual Asian Development Fund allocation, based on the common criteria for all countries, is $5 million for 2002–2004. The PBA system also requires assessment of country-specific criteria. The proposed lending program for 2002–2004 is $17 million for three projects: (i) strengthening the public accounting system, (ii) the second regional development project, and (iii) postsecondary education and skills development. The average lending level is, however, subject to change depending on the outcome of the PBA exercises in each year. The proposed technical assistance (TA) program for 2002–2004 includes nine TAs for a total of about $3.6 million.
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