ADB Approves US$20 Million Grant for Rehabilitation in Tsunami-Affected Maldives

MANILA, PHILIPPINES (31 March 2005) - ADB today approved a US$20 million grant from its Asian Tsunami Fund and a loan of $1.8 million equivalent from the Asian Development Fund for the Maldives to help rehabilitate damaged infrastructure and restore livelihoods in the wake of the tsunami of 26 December 2004.

For the Maldives, the disaster was of national proportions, affecting one third of the 300,000 population. Thirty-nine out of 200 inhabited islands were significantly damaged.

Thousands of people had their livelihoods undermined and swift mitigating measures are needed.

"Recovery needs to be accelerated by reconstructing damaged infrastructure and restoring livelihoods, especially of the poor," says Richard Vokes, Director of ADB's South Asia Operations Coordination Division.

The total damage is estimated to be about $470 million, nearly 62% of the gross domestic product (GDP). The tourism sector suffered the largest direct damages, with losses of around $100 million, followed by the housing sector, with losses close to $65 million.

GDP growth in 2005 is expected to fall to 1% from the pre-tsunami estimate of 7.5%. The budget deficit is expected to rise to 15% in 2005 from an expected 4% of GDP.

The assistance consists of two components. A quick disbursing component, comprising $4.7 million in grants and a $1.8 million concessionary loan, will help meet the general expenses of tsunami-related rehabilitation and reconstruction.

The project component, consisting of $15.3 million in grants, will rehabilitate high-priority, tsunami-damaged infrastructure and facilities by providing civil works, equipment and materials, working capital, and consulting services.

"The rehabilitation and reconstruction work will use cost-effective design standards to restore facilities to pre-tsunami levels, or higher. Where necessary, project design will include protection against future natural disasters," says Mr. Vokes. "The project will also restore livelihoods in the fisheries and agriculture sectors."

The sectors to be rehabilitated include:

• Water supply, sanitation and solid waste management
• Transportation, including rehabilitation of maritime navigation aids, provision of inter-island transport, repair of jetties, sea walls and quay walls, causeways, harbor basins, and repairs at the Male international airport
• Power, including installation of new generators and distribution network, streetlights, and panel boards to synchronize operations of multiple generators
• Fisheries, including providing 128 islands with fish processing equipment, working capital, and extension services
• Agriculture, including tools and equipment for farmers, and working capital to rehabilitate farms.

These priority areas have been identified based on the joint needs assessment through consultation with the Government, the private sector, nongovernment organizations, civil society and other development partners. The implementation will involve community participation.

About $800,000 will be used for consulting services for project design, implementation, monitoring and evaluation.

The estimated total cost of the project is $25.3 million equivalent, including the quick-disbursing component. The Government will contribute $3.5 million toward the project component's total cost of $18.8 million.

The Ministry of Finance and Treasury is the executing agency for the project, which is due for completion in March 2007.

About ADB