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ADB's Updated Program In Maldives To Promote Economic Revival In Outer Islands

MANILA, PHILIPPINES (17 August 2004) - The Asian Development Bank (ADB) plans a US$12 million lending program to the Maldives in 2005-2006 aiming to promote economic revival in the outer islands and atolls, according to a Country Strategy and Program (CSP) Update for 2005-2006, endorsed by ADB's Board of Directors.

The planned lending program consists of two loans to establish an inter-island transport system and complete the electrification of the country's outer islands. A standby project to develop small and medium enterprises (SMEs) in the atolls is also programmed.

Final lending allocations over the period will depend on country performance and resource availability from ADB's Asian Development Fund, which supports the sustainable development of poor countries in the Asian and Pacific region.

"Poverty in the country is related to remoteness of the islands from the center and a lack of services in the atoll," says Meriaty Subroto, an ADB Country Programs Specialist. "The CSP Update supports the Government's priorities of regionally balanced growth that will spread benefits more widely and equitably."

The Maldives has a narrow economic base relying on two key sectors - tourism, which accounts for 20% of gross domestic product, and fishing. Although tourism arrivals in 2003 reached a record high, the sector remains vulnerable to external factors.

The Government is committed to promoting economic diversification to increase income generating activities, especially for the atoll population.

The planned transport infrastructure development project will help spur the economy and improve access to social services in the atolls. The island electrification project is a follow-on to the Outer Islands Electrification Project and will cover those islands not included in the earlier project.

The planned project for the development of SMEs in the atolls will support activities such as financing, market accessibility plans, and entrepreneurial training to contribute to the Government's pro-poor growth initiatives.

The lending program over the two years will be supported by technical assistance amounting to about $2 million. It will focus on project preparation, human resources development, and good governance.

As of end-2003, total public sector lending to the Maldives comprised $83.7 million for 13 loans and $16.2 million for 48 TAs.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is usually prepared every year.

ADB is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members - 45 from the region. In 2003, it approved loans and technical assistance amounting to US$6.1 billion and US$177 million, respectively.

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