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Maldives and ADB

ADB operations in Maldives support efforts to enhance energy efficiency, improve urban infrastructure and services, develop MSMEs, and strengthen the capacities of the government in program and portfolio management.

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:
$5.89 million

Paid-in capital subscription:
$0.29 million

Comprising around 1,190 small islands in the Indian Ocean, Maldives was home to around 515,696 people in 2018 and is famous for some of the world’s most beautiful beaches.

ADB has been supporting Maldives since 1978, with high-end tourism propelling the country’s strong economic expansion over recent decades. This has helped Maldives gain upper middle-income status with the highest per capita income 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

Cumulative loan and grant disbursements to Maldives amount to $196.9 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.


ADB-Supported Projects and Programs

Given the country’s geographic spread, transport is a key development priority in Maldives. ADB has been supporting improvements in transport connectivity on and between islands to eventually provide a nationwide and sustainable transport network. The bank has helped expand the capacity of the commercial harbor in Malé to improve maritime services. ADB is also financing the expansion of the passenger and cargo harbor on Kulhudhuffushi island in the northern part of the country, benefiting 8,200 people on Kulhudhuffushi and 30,000 residents on nearby islands.

In dealing with the high cost of electricity and the unreliability of power supply, ADB and the Government of Maldives have been working closely to replace inefficient diesel-based power generation grids with hybrid renewable systems through the Preparing Outer Islands for Sustainable Energy Development Project. This work is expected to benefit nearly 160 islands, generate 21 megawatts of solar power, substantially cut carbon dioxide emissions, and reduce the subsidy burden on the government.

To address severe environmental pollution and deteriorating livability in the Greater Malé area, ADB is funding the Greater Malé Environmental Improvement and Waste Management Project. The investment will establish an integrated and environmentally sustainable solid waste management system including modern waste collection, transfer, and disposal.

Because Maldives has a narrow resource base, ADB has been helping the country strengthen its economy and promote private sector growth. In 2019, as part of the South Asia Subregional Economic Cooperation program, ADB funded the establishment of a national single window to foster international trade in Maldives. The project will develop a platform for seamless communication between cross-border regulatory agencies, the relevant state-owned enterprises, and traders, helping reduce the time and cost to comply with documentary requirements for importing and exporting, and strengthening the business environment. ADB also supports the development and expansion of micro, small, and medium-sized enterprises and recently completed a project that conducted 495 training programs and awareness sessions for 13,326 entrepreneurs, including 7,246 women and 8,542 youth. The bank likewise supported taxation reforms in Maldives, helping increase tax revenues and provide a more diversified tax base.

In line with the new government’s strategy for more inclusive and sustainable growth, ADB supported Maldives in drafting the country’s national development plan. The plan intends to serve as a long-term development road map over the next 10 years, laying out the framework for resource allocation for sectoral and regional development.

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 from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of longterm cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development 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 Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Maldives in 1981. Since then, sovereign cofinancing commitments for Maldives have amounted to $93.18 million for six investment projects and $4.23 million for seven technical assistance projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Maldives relies heavily on tourism and fisheries for revenues. Improving the country’s business environment, particularly for micro and small enterprises, is vital to encourage investment and support job creation.

The country’s location and widely dispersed population make it difficult and costly to provide public services and economic infrastructure such as interisland transportation. Improved maritime transport and harbor facilities, along with efficient port management, remain vital to relieving port congestion and boosting trade.

The main development challenges for the government are to generate sustainable economic growth and finance much-needed public infrastructure. This requires borrowing that poses a threat to the country’s fiscal and public debt sustainability and worsens its external current account position. To help alleviate its debt burden and sustain its economic gains, Maldives must introduce measures to widen its revenue base, efficiently manage public expenditures, and gradually implement public investment projects.

Future Directions

For 2020–2022, Maldives will have an indicative allocation of $81.19 million, including $18.86 million for disaster risk reduction.

Following completion of the Strategic Action Plan, 2019–2023, ADB will formulate a new country partnership strategy for Maldives. The bank will advance efforts to enhance energy efficiency, improve urban infrastructure and services, promote trade facilitation, and strengthen the capacities of the government in program and portfolio management. ADB has also committed to establishing a waste-to-energy facility in the Greater Malé area and exploring cleaner energy sources for the country.

Cargo operations have become faster and smoother.

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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