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Maldives and ADB

ADB’s future efforts in Maldives will focus on outcomes in public sector management, infrastructure services, health and education, trade, renewable energy, solid waste management services, gender, and public–private partnerships.

ADB's Work in Maldives

ADB Membership

Joined 1978

Shareholding and Voting Power

Number of shares held:
426 (0.004% of total shares)

Votes:
39,540 (0.297% of total membership, 0.457% of total regional membership)

Overall capital subscription:
$6.14 million

Paid-in capital subscription:
$0.3 million

Comprising around 1,190 small islands with only 188 inhabited, Maldives has been supported by the Asian Development Bank (ADB) since 1978.

High-end tourism has propelled the country’s strong economic expansion over recent decades, and this has helped Maldives gain upper middleincome status, with the highest income per capita in South Asia. However, as a relatively small island economy, the country is extremely vulnerable to external economic shocks and the negative impacts of climate change.

Aerial view of Malé

Since 1978, ADB has committed loans, grants, and technical assistance worth $476.75 million (excluding equity investment of $4.5 million) for Maldives.

Maldives has access to the Asian Development Fund as a Group A developing member country.

Cumulative loan and grant disbursements to the Maldives amount to $255.6 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.


ADB-Supported Projects and Programs

As the coronavirus disease (COVID-19) pandemic hit, ADB extended immediate assistance to Maldives for the procurement of emergency medical goods and supplies, materials for critical care facilities, and other key medical equipment. With tourism shutting down and the economy contracting, ADB likewise provided budget support to help Maldives implement its countercyclical expenditure program for mitigating the health, social, and economic impacts of the pandemic. ADB’s COVID-19 Active Response and Expenditure Support Program provided budget support to the government for its pandemic response, social protection for the poor and vulnerable, and subsidized working capital for the self-employed and businesses.

ADB has also been supporting projects that are designed to curb climate change and disaster impacts while creating a cleaner environment in Maldives. The Preparing Outer Islands for Sustainable Energy Development Project is expected to install at least 21 megawatts of solar power, 10 megawatt-hour of battery energy storage and energy management system with distribution grid upgrades across 160 outer islands, substantially cut carbon dioxide emissions, and reduce the subsidy burden on the government. In 2020, ADB approved additional financing for the project to cover more outer islands, create gender-inclusive income opportunities, and implement pilot projects to support clean energy in outer island transport and fisheries.

ADB is also funding the Greater Malé Environmental Improvement and Waste Management Project. This will establish an integrated solid waste management system in Greater Malé and its neighboring outer islands, raise public awareness of reduce–reuse– recycle methods, and strengthen institutional capacities for service delivery and environmental monitoring. The forthcoming Greater Malé Waste– to–Energy Project will help build a waste treatment facility using waste–to–energy technology and disposal infrastructure for the Greater Malé region and neighboring outer islands—ultimately preserving the environment and improving ocean health.

Given Maldives’ geographic spread, ADB has been supporting improvements in transport connectivity on and between islands. The bank has financed expansion of the commercial harbor in Malé and the passenger and cargo harbor on Kulhudhuffushi in the northern part of the country, the latter benefiting over 30,000 people.

Vital to economic growth in a country with a limited economic base, ADB has been helping Maldives promote private sector development. The bank funded the establishment of a national single window to foster international trade in Maldives as part of the South Asia Subregional Economic Cooperation program. This will help reduce the time and cost of complying with documentary requirements for importing and exporting, and strengthen the country’s business environment.

Limited access to finance in the small islands of Maldives holds back local business development and employment opportunities but a new program has helped to set up 172 new businesses.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness.

ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in the Maldives in 1981. Since then, sovereign cofinancing commitments for the Maldives have amounted to $190.54 million for eight investment projects and $4.23 million for seven technical assistance projects.

In 2020, Maldives received a total of $47.36 million loan cofinancing from the Japan International Cooperation Agency for the COVID-19 Active Response and Expenditure Support Program, and $40 million loan cofinancing from the Asian Infrastructure Investment Bank and $10 million grant cofinancing from the Japan Fund for the Joint Crediting Mechanism for the Greater Malé Waste– to–Energy Project.

A summary of cofinanced projects is available at Maldives: Cofinancing.

Operational Challenges

Maldives has a narrow economic base, dependent on tourism and fisheries, and remains highly vulnerable to external shocks. The COVID-19 pandemic, which has crippled tourism and severely damaged the economy, highlighted these vulnerabilities. Providing mid- and long-term assistance for economic recovery, diversification, and growth is crucial. This includes improving the business environment, particularly for micro and small enterprises, to encourage investment and create jobs.

Heavy borrowing required for massive infrastructure projects has threatened the country’s fiscal and public debt sustainability and aggravated its external imbalance. Maldives therefore needs to widen its revenue base, efficiently manage public expenditures, and gradually implement public investment projects.

The country’s unique geographic spread and widely dispersed population translate to costly and difficult provision of public services and infrastructure. Improved maritime transport and harbor facilities, along with efficient port management and automated business processes, can relieve port congestion and boost trade.

Cargo operations have become faster and smoother.

Future Directions

In October 2020, ADB endorsed its new country partnership strategy, 2020–2024 for Maldives. The strategy, which is aligned with the government’s Strategic Action Plan 2019–2023, focuses on three priorities: (i) enhanced public sector efficiency and fiscal sustainability; (ii) strengthened competitiveness and a diversified economic base; and (iii) improved quality of life for island communities, while ensuring environmental sustainability.

ADB’s future efforts will focus on outcomes in gender, health and education, renewable energy, solid waste management services, infrastructure services, trade, publicprivate partnerships, and public sector management. The bank also commits continued support to cushion the impacts of COVID-19 and develop Maldives’ long-term resilience to the effects of the pandemic. For 2021–2023, Maldives will have an indicative performance base allocation of $68.37 million.

This article was originally published in the ADB and Maldives: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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