OCTOBER 2015 100116 MALDIVES Country Snapshot The World Bank Group Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Execu- tive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without per- mission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978- 750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202- 522-2422, e-mail pubrights@worldbank.org. Photos credits: United Nations Photo Library Cover Design and Text layout: Duina Reyes COUNTRY SNAPSHOT Maldives was one of the world’s 20 poorest ing the contours of economic development, countries in the early 1980s. Three decades with nature-based tourism being the key driver later, its inhabitants enjoy the same levels of of economic growth and fisheries an important gross domestic product (GDP) per capita and sector of employment for the local population. human development outcomes as a middle- The development of a profitable high-end tour- income country. Over the past 30 years, Mal- ism sector has fueled sustained growth rates dives has successfully built on its extraordinary and supported public investments in health and natural assets to promote growth and socio- education. economic development. Maldives shares many of the development challenges of other Small Maldives’ model of economic development Island Developing States (SIDS), such as: a small has, however, not been inclusive and its fu- domestic market; a narrow and fragile resource ture sustainability is at stake. Although this base; a shortage of skilled manpower; difficult economic model based on tourism-led growth inter-island transport and communication; high and redistribution of tourism-generated rev- cost of social and economic infrastructure pro- enues has contributed to improving the well- vision; heavy dependence on external trade; being of the Maldivian population, poverty re- and vulnerability to external shocks and natural duction has been below potential and the level disasters. These challenges are compounded, of inequality -- and lack of shared prosperity -- in the case of Maldives, by the country’s high remain a major challenge. Recent political and geographic dispersion, with 1,190 coral islands socio-economic developments have, moreover, (199 of which are inhabited) grouped in 26 brought to evidence the inherent vulnerability atolls, spread over roughly 90,000 square ki- of Maldives’ development and raise concerns lometers. With more territorial sea than land, about its fiscal, environmental and social sus- marine resources have played a vital role shap- tainability. ECONOMIC OVERVIEW and external imbalances driven by large and rising public spending leading to high debt, limited fiscal space and depleted reserves, and an undiversified MALDIVES economy, which primarily depends on tourism and fisheries. 2014 Population(1) 341,256 Recent Developments GDP (USD mn) 3,032 GDP per capita (USD PPP) 14,774 The arrest and trial of former President Na- GDP per capita (USD) 8,625 sheed and other politicians in February 2015 and subsequent political developments have Sources: World Bank, WDI Notes: (1) Excluding expatriate workers (58,683) sparked domestic protests and criticism from Sources: Ministry of Finance and Treasury, National Bureau of Statistics, international bodies and local independent com- Maldives Monetary Authority, WDI, staff calculations missions, and have led to negative travel advisories, Economic growth continued its recovery from the which might affect tourism. 2012 dip, while inflation has slowed down, although Growth in 2014 (estimated by Bank staff at 5 per- recent political developments present a downside cent), continued its recovery from the dip of 1.3 risk. The dominant tourism industry is operating on percent in 2012. This was driven by tourism and an enclave model of development, while the fisheries related sectors, which maintained an upward trend sector, with the largest share of employment, is only in 2014, albeit at a slower pace, while the public weakly linked to this sector. The challenges are fiscal sector and social sectors showed improvement Maldives Country Snapshot 1 tial outflows through interest Contributors to GDP Growth payments, dividends and re- 25 Other mittances kept the current ac- Education, health, count in a deficit at 6.3 percent social services of GDP. The current account Government administration is more than fully financed Manufacturing by foreign direct investment 5 (FDI), mainly into the tourism Agriculture sector. Fisheries Tourism-related As a result of the reduced Tourism goods imports and a large im- -15 provement in net capital in- GDP flows, gross official reserves 05 07 11 12 e 03 04 08 13 06 09 10 14 20 20 20 20 20 20 20 20 20 20 20 20 have increased from $368 mil- lion at the end of 2013 to $693 over last year as well. The expansion of the indus- million at the end of July 2015, but usable reserves trial sector was caused by the significant increase (net of short-term foreign liabilities) remained low in construction activity—which grew at 20.6 per- at only $214 million, covering about 1.3 months of cent in 2014—while manufacturing contributed imports of goods and services. However, the stable marginally. The agriculture and fisheries sector is exchange rate of MVR 15.4 per US dollar and the the only sector to have contracted in 2014 owing parallel market premium do not signal any short- to a decline in activity of fisheries output. This is ages, and in practice the tourism industry appears significant as the fisheries sector has traditionally to supply sufficient quantities of foreign exchange played a large role in employment generation, es- at a stable premium over the official exchange rate. pecially among poorest Maldivians. Tourism and related activities account for two-thirds of GDP, but Outlook provide employment to only 22 percent of the la- bor force. The government estimates growth in 2015 to reach 6.3 percent, but this appears unrealistic Following the global decline in commodity prices, with the growth in key tourism indicators, such as annual average consumer price index inflation arrivals and bed nights, well below the rates seen slowed down sharply to 2.4 percent in 2014 and in 2014. reached 1.6 percent in July 2015. The 2015 budget foresees an ambitious fiscal con- Fiscal policy in Maldives focuses on redistribution solidation mostly by increasing one-off revenue of tourism-related revenue through food and elec- and planning a fiscal consolidation. The full impact tricity subsidies, health insurance and public sector of the increase in the Tourism Goods and Service jobs. Despite high revenue of 32.4 percent of GDP, Tax rate will be felt in 2015, while the recently spending reached 44 percent of GDP, leading to a abolished tourism bed tax of $8 per night will be fiscal deficit estimated at 11.6 percent of GDP in replaced by a “green tax” on the same base later in 2014. Tourism-related earnings have driven the in- 2015. crease in total revenue, but not enough to prevent a widening of the deficit. Inflation is projected to remain subdued as long as global commodity prices are expected to remain Persistent primary fiscal deficits have led to a high low, which will also benefit the current and fiscal and increasing level of public debt. Although the accounts. country’s risk of external debt distress is moderate, overall public debt is high at 74.6 percent of GDP in 2014, and subject to vulnerabilities. Challenges The recently revised balance of payments numbers The immediate macroeconomic challenge is the show that goods imports and tourism services ex- fiscal and external imbalances driven by high ports nearly balance each other out, but substan- and rising public spending. The projected fiscal 2 (annual percent change unless indicated otherwise) 2011 2012 2013 2014e Real GDP growth, at constant market prices 6.5 1.3 4.7 5.0 Private Consumption ... ... ... ... Government Consumption ... ... ... ... Gross Fixed Capital Investment ... ... ... ... Exports, Goods and Services ... ... ... ... Imports, Goods and Services ... ... ... ... Real GDP growth, at constant factor prices 6.5 1.3 4.7 5.0 Agriculture 1.1 0.0 5.1 … Industry 3.0 0.5 2.4 … Services -1.1 -0.7 8.2 … Prices Inflation (Consumer Price Index) 11.3 10.9 4.0 2.4 Current Account Balance (% of GDP) -16.0 -7.4 -4.4 -6.3 Fiscal Balance (% of GDP) -6.6 -7.6 -7.8 -11.6 Sources: Maldives Monetary Authority, Ministry of Finance and Treasury, staff forecasts consolidation is not enough to bring public debt- Ministry of Finance and Treasury (MoFT) as well to-GDP on a declining path and fiscal consolidation as in government budget preparation. Additional by raising revenue and reducing expenditure will technical assistance has informed government ef- be needed. Limited reserves, a high level of public forts to reform its two major assistance schemes -- debt and the short maturity of domestic debt adds the universal health insurance scheme and electric- additional vulnerability. ity subsidies -- with particular focus on the social and economic impacts of reforms. This work has Meanwhile, continued domestic political unrest complemented ongoing policy dialogue on fiscal and a slowdown in major tourism-providing coun- sustainability and enabled the government to bet- tries (China and European countries) might lead to ter assess its options to limit current expenditures reductions in tourism visits, which could put pres- in these areas while guaranteeing equity of re- sure on growth, revenue and the balance of pay- forms. The broader dialogue on fiscal sustainabil- ments. ity has aimed at shedding light on policy options There are limited investment opportunities in the to support fiscal consolidation efforts and address private sector outside tourism, and banks prefer to macroeconomic vulnerabilities. In particular, the park their available assets at the central bank and emphasis has been on the need to contain and ra- abroad. tionalize public spending, improve the efficiency and equity of social spending and service delivery, The World Bank has been providing technical and address issues pertaining to the commercial assistance in support of efforts to increase ef- banking sector. The World Bank continues to co- ficiency in public spending and bolster fiscal ordinate closely with the International Monetary prudence. Technical assistance has aimed at build- Fund (IMF). A joint Debt Sustainability Analysis ing capacity in public expenditure analysis in the was undertaken earlier in 2015. Maldives Country Snapshot 3 RECENT SECTOR contributor to GDP at 28 percent, and is the great- est generator of foreign exchange earnings at more DEVELOPMENTS than 60 percent in 2014. Revenue from the sector accounts for 38 percent of government revenue, derived from various taxes and lease of islands.1 Public Financial Management Although Maldives has managed to position itself as a high-end destination, the sustainability of such Institutional weaknesses in public financial premium cannot be taken for granted. Governance management have undermined the govern- shortcomings in the current model for allocation of ment’s capacity to undertake necessary fiscal resort leases may be hampering the development of adjustments in an efficient manner. A Public tourism and preventing the country from maximiz- Expenditure and Financial Accountability (PEFA) ing benefits and enhancing inclusive growth, while assessment carried out by the IMF jointly with the concerns over the investment climate and political World Bank and the government in early 2014 un- risk may undermine the ability of Maldives to at- derscored the need for significant improvements in tract reputable investors in the future. The industry the country’s public financial management systems has developed as an enclave, with limited positive -- notably in the areas of budget credibility and pre- spillovers to the local communities. dictability as well as control in budget execution, accounting and reporting. A comprehensive legis- A more inclusive tourism industry may hold the lative framework and robust organizational struc- key to shared prosperity in the country. Better tures for public financial management institutions linkages between the resorts and local enterprises also are lacking in the country. State oversight of may help to leverage tourism growth for develop- state-owned enterprises is particularly problemat- ment of other tradable sectors. Tourism is a large ic insofar as there is no systematic financial report- and rapidly growing source of jobs, but most of ing, auditing, or accounting for de facto transfers them are not taken up by the local population made under several budget categories. due to such factors as: a reservation wage that is too high for unskilled jobs; lack of skills for tech- The government requested World Bank sup- nical and managerial jobs; social norms; and the port to strengthen its public financial manage- lack of adequate transport. A nascent segment of ment systems. Building on the PEFA assessment, community-based tourism, such as locally owned a project was prepared and approved in June 2014 guesthouses, may represent a valuable option for designed to enhance budget credibility, transpar- diversification and inclusive growth through in- ency, and financial reporting of central govern- tegration with local communities. Growth in this ment finances. The project also supports greater segment has some limitations and risks. There are and more efficient usage of the existing Public Ac- still unrealized opportunities for linkages between counting System as a tool for better budget execu- tourism and local providers of fish and agriculture tion, internal control, cash management, account- products. Opportunities for service-provision link- ing, and fiscal reporting in addition to supporting ages are more limited, as many resorts already own the National Tender Division by benchmarking and and operate their support services and ancillary strengthening procurement functions. The external functions. audit function is being supported under a parallel The fisheries sector is a critical contributing Institutional Development Fund grant to build the sector for the country’s national economy and capacity of the Auditor General’s Office with a view forms the most important primary economic to enhancing the scope and impact of audit services activity in almost all of the country’s inhabited it provides. islands. Before the development of tourism, fisher- ies was the most important industry and source of Growth Prospects Tourism is the most important industry in Mal- 1  This includes all tourism-related taxes: (part of) import dives, but the linkages with the local economy duty, Tourism tax, GST on Tourism, Airport Service Charge, Roy- are limited. Tourism constitutes by far the biggest alties, land and resort rent, Business Profit Tax. 4 growth for Maldives. Although the relative impor- Food security concerns have revitalized inter- tance of the fisheries sector has declined since the est in the development of local agriculture pro- late 1970s (due mainly to the rapid growth of tour- duction. Maldives produces less than an estimat- ism), its role in the Maldivian economy (and cul- ed 10 percent of its food requirements, reaching ture) remains significant. Fisheries remain a large self-sufficiency in fish only. Except for coconut and source of employment, the largest source of physi- fresh tuna, 90 percent of all food items are import- cal exports, one of the few local industries supply- ed. Food imports are required not only to meet do- ing the touristic resorts, and a major source of food mestic food demand for the Maldivian people but supply for the local market. In 2011, it accounted are also essential to cater to the tourism industry directly for 1.4 percent of GDP and, and currently in Maldives. Import dependency, limited storage generates $110 million in export revenue. facilities and ad hoc distribution pose food secu- rity risks. In response to the recent food and fuel The sustainability of fisheries is, however, jeop- crises, Maldives has integrated food security con- ardized by inadequate fisheries management siderations into national planning. It has removed and overfishing. The industry is experiencing a tariffs on imported food items, agricultural inputs declining trend, with both catch and employment and fuel, and is looking for ways to intensify and falling. Employment of women in the downstream diversify agriculture and fisheries. The government fish processing industry has been reduced to prac- is working with international agencies and private- tically nil. Maldives’ fisheries sector benefits from sector partners to develop agriculture by introduc- high value stocks, but its recent trends highlight ing new and innovative techniques and technology vulnerability to a mix of factors, including overfish- to strengthen the contribution of farming to rural ing, higher fuel costs, temperature rise leading to development. Agriculture is a relatively minor ac- change in schools aggregation, and lack of more ef- tivity in Maldives and has contributed only margin- fective regional eco-systemic management of the ally to long-term growth. Potential for agriculture shared skipjack tuna stock. Governance deficien- is limited due to the scarcity and dispersion of ar- cies (limited number of skipjack tuna processing li- able land and high cost of fresh water for irrigation, censes) appear to have hampered the development and the country will remain dependent on import- of fisheries and the value they bring to the economy. ed food into the future. Overfishing of reef fish and climate change present risks to the sustainability of the tuna fisheries as There are a number of opportunities to capi- well as tourism. Threats to the health of the coral talize on agriculture for local income growth. reefs that are significant to the fishery sector also While no official data exists, the linkages between come from habitat degradation and loss due to pol- local agricultural production and the tourism in- lution, harbor construction and reclamation. dustry are still limited. Anecdotal evidence sug- gests that concerns about the volume, quality, and Maldives has the opportunity to further devel- reliability of local production significantly reduce op its fisheries sector, and to capitalize on the the incentives for resorts to source agricultural potential benefits to enhance economic growth produce locally, in favor of imports. Despite that, and sustainable development at a national lev- market participants from both supply and demand el. As sustainable and inclusive growth of the fish- consider that there may be potential to further eries sector will likely not be based on increasing and more systematically exploit comparative local the volume of catch, a transition to a wealth-based advantage in the production of various fruits and fisheries management system may hold promise vegetables to cater to the resorts. Such an emphasis for the future. There are a range of targeted op- may have the added benefit of increasing women’s tions for exploiting the opportunities presented to employment, since agriculture has a predominantly Maldives fisheries sector at present, but effective female labor force (women represent 60 percent of strategies and plans will need to be developed to total employment in agriculture). Currently, mostly identify not only economic potential, but also envi- bananas, melons and papaya are produced locally ronmental impact. The World Bank is assisting the for resorts but it may be worthwhile to analyze government in this connection, helping in the first more systematically what other high-value fruits instance to identify the opportunities for sustain- and vegetables are suitable for cultivation. In addi- able and inclusive growth of the fisheries sector. tion to broadening production choices and testing Maldives Country Snapshot 5 cultivation feasibility of a larger pool of fruits and than upper middle-income countries, and other vegetables, the feasibility of low-cost smallholder countries in South Asia. The lack of shared pros- greenhouse technologies combined with house- perity in Maldives is the main determinant of the hold based-irrigation/ ‘fertigation’2 systems could limited impact of growth on poverty reduction. The be explored. unequal impact of growth is further reflected by an increase in the gap between the poorest and richest Poverty and Shared Prosperity segments of the population. Limited job opportunities, especially for low- Poverty incidence in Maldives is substantially skilled labor may have played an important in line with that of an upper middle-income role in limiting the contribution of growth to country. According to the latest available House- poverty reduction. The lack of growth in fisheries hold Income and Expenditure Survey (HIES) col- is a particularly important determinant of the lim- lected in 2009/10, the share of population living ited contribution of growth to poverty reduction, with less than $1.25 a day in 2005 purchasing pow- especially in the atolls. As labor income is the main er parity terms was 4.9 percent, whereas the corre- sponding share using the $2.00-a-day poverty line source of household income for the poor, an inclu- was 17.02 percent. These figures are very similar sive development of the labor market is key for re- to the average poverty outcomes of upper middle- ducing poverty and boosting shared prosperity. income countries, two of the small Pacific islands, Maldives performs better than the other coun- and neighboring Sri Lanka. tries in South Asia with respect to various so- Poverty declined nationwide between 2003 and cio-economic indicators and gender equality. 2010, although not uniformly across Maldives’ Compared to other countries in South Asia, Mal- territory. Poverty declined in the atolls while it re- dives ranks first in terms of per-capita GDP and is mained stable in the capital area Malé. The poverty second only to Sri Lanka based on the Human De- rate is the highest in the Central North and South- velopment Index ranking. In 2010, life expectancy ern Atolls, while the capital area Malé is home to at birth was 76.8, three years higher than both the the largest share of poor individuals. Sustained mi- average for upper middle-income countries and Sri gration from the atolls to the capital accounts for Lanka, the second best of the South Asia region. most of the diverging poverty trends at the subna- Maldives’ performance is also better than the av- tional level. erage upper middle-income country with respect to infant mortality rate, although it is second to Despite progress, the pace of poverty reduction Sri Lanka in the South Asia region. Maldives fares has been below potential when considering significantly better than many countries when it the fast GDP growth of the Maldivian economy comes to gender equality, ranking 49th on the Gen- between 2003 and 2010. The growth elasticity der Inequality Index in the 2014 Global Human of poverty reduction in Maldives of about 1.2 per- Development Report of the United Nations De- cent is relatively low by international standards. velopment Programme. The island nation has the This is evident in comparison to other countries. fewest disparities between men and women, when For example, while Maldives and Sri Lanka shared compared with other so-called medium human the same growth rate (approximately 4.8 percent development countries as well as its South Asian a year over the period), poverty reduction in Mal- neighbors. The country has attained gender par- dives was one-third less than experienced in Sri ity in primary and secondary enrollment, and the Lanka.3 Given the slow pace of poverty reduction, number of Maldivian women attaining university Maldives will be able to reduce extreme poverty degrees is at par with that of men. Gains in gender under 1 percent by 2040, a much longer period equality observed in education, health, and other developmental outcomes do, however, run the risk of being tempered by increasingly conservative so- 2  Fertigation is the combined application of water and nutri- cial and cultural norms. ents to a crop – a mix of fertilizer and irrigation. 3  Poverty decreased at about 0.5 percent per year in Maldives Analytical work supported by the World Bank is as opposed to 1.6 percent in Sri Lanka. shedding further light on the constraints to and 6 opportunities for reducing poverty and boost- the expensive Senior Citizen Allowance, the lat- ing shared prosperity in the Maldives. The Sys- ter of which comes on top of the old-age pension tematic Country Diagnostic undertaken over the benefit. World Bank technical assistance has sup- past year offers insights in this connection and will ported the design of a new targeting mechanism, serve to inform the World Bank Group’s forthcom- which combines a proxy means-testing approach ing Country Partnership Framework and strategy and cross-validation of self-reported information for engagement in the Maldives. Knowledge has with existing administrative databases. The gov- also been deepened through recent analytical work ernment has piloted this targeting mechanism and undertaken on gender and youth in the Maldives. plans to apply the mechanism in the electricity sub- Further analysis is underway this fiscal year on sidy program shortly. The World Bank project has labor market dynamics, with a specific focus on supported the development of a social registry of women and youth, using the soon-to-be-released all households that have re-applied for the electric- 2015 census data. ity subsidy. The World Bank will continue to sup- port the implementation of the targeted electricity Social Protection subsidy program. Notwithstanding the significant achievement in Environment, Climate Change and Energy reducing poverty, it remains a concern in some atolls and vulnerability continues to be high. Environmental sustainability is the fundamen- The World Bank has been assisting the government tal development challenge in the country. Bio- in the design and implementation of social protec- diversity-based sectors contribute more than 70 tion reforms that aim to strengthen the effective- percent of national employment, over half of public ness of pensions and social assistance programs to revenues, almost all exports, and close to 80 per- help households mitigate and cope with risks and cent of GDP. Indeed, the new constitution mandates to provide income support to poor households. the protection of the environment as a key citizen’s In collaboration with the government, the World right, demonstrating its importance to the future Bank prepared an analytical report titled “Social development and prosperity of the country. From Protection in the Maldives: Options for Reforming an economic growth and development standpoint, Social Assistance and Pensions” that outlined ma- the management of the country’s natural resources jor strategic directions for reform. Building on this and complex ecosystems will continue to determine analytical work, a World Bank project has support- the Maldives’ comparative advantage and growth ed the establishment of a fiscally sustainable pen- prospects into the future. Both the government and sion system and a strong pension administration its development partners realize the importance of agency. The newly introduced defined contributory environmental sustainability and are placing a high pension scheme has expanded the coverage be- priority on work in this regard. yond public employees to include all formal sector workers and is being rolled out to self-employed Environmental management is a national pri- workers. Additional technical and financial support ority that has underscored successive national has been provided to build institutional capacity development and tourism plans. Environmental to effectively deliver all social safety net benefits, pressures stem from the country’s fragile geogra- including development of an integrated Social Pro- phy, compounded by rising population densities, tection Information System with a targeting mod- increased tourism and changing consumption pat- ule. While progress has been made in recent years terns. The Maldives faces growing problems with to expand safety net coverage and build the ben- solid waste management and pollution from sew- efits delivery system, several important challenges age and other effluents emanating from urban set- remain. tlements, hotels, fish-processing plants, ships and other sources. The quantities of solid waste gener- The financial sustainability of several untarget- ated exceed disposal and treatment capacity. Most ed social protection programs is a fundamental wastes are dumped onto the island foreshore and challenge. That is particularly the case for the near burned at low combustion temperatures. Uncon- universal electricity subsidy program, the overly trolled waste disposal and floating debris at tourist generous universal health insurance scheme, and resorts are the most visible threats to the country’s Maldives Country Snapshot 7 reputation as a pristine high-end tourist destina- mediately following the 2004 tsunami and pollu- tion. Habitat degradation threatens marine assets. tion of aquifers by human waste have reduced use Coral mining for construction and dredging of la- of historically important groundwater as a potable goons for reclamation is the most prevalent cause water source in the islands. The low-lying land ar- of reef destruction. Other pressures include dam- eas of the Maldives make it particularly vulnerable age caused by divers, illegal collection of corals, to rising sea levels -- with associated saltwater in- and unsustainable exploitation of high-value reef trusion and flooding problems. Limited rainwater resources. Terrestrial threats include timber har- harvesting capacity, the high cost of desalination, vesting and destruction of mangroves, while pollut- and financial and institutional capacity constraints ants from numerous sources lead to coral reef dam- have made progress in improving water manage- age. These environmental challenges could hamper ment in the nation’s inhabited islands difficult. the country’s economic growth, especially if they undermine tourism. The unique geographic attributes of the Mal- dives make its water resource situation both Environmental management is constrained by complex and diverse. With populations on the is- the lack of technical and managerial capacity to lands ranging from 55 to 120,000 inhabitants, even deliver the required infrastructure to monitor basic water and sanitation service must be tailored and control environmental impacts. The World to local resources and population needs. Manage- Bank-supported Maldives Environmental Manage- ment of the limited water resources is complicated ment Project is addressing these constraints, de- due to the small catchment areas for rainfall, limited veloping an integrated solid waste management rainwater and groundwater storage capacity, long system in the North Central Region. The project dry seasons, and the susceptibility of groundwa- has already built capacity for environmental man- ter aquifers to pollution from poor sanitation and agement through the creation of a cadre of trained salinity intrusion. As an indication of both water civil servants, introduction of a degree program at scarcity and low island-level water self-sufficiency, the Maldives National University, and enhanced more than 100 islands have requested shipments monitoring and stewardship of terrestrial and ma- of “emergency water” to be delivered from Male rine resources. With financing from the Maldives during the annual dry season since 2005. The lim- Climate Change Trust Fund, the World Bank also ited ability of the islands to supply sufficient water recently supported the Ari Atoll Solid Waste Man- for residents is in large part due to underutilization agement Pilot Project to demonstrate an island- of existing infrastructure and lack of knowledge level integrated solid waste management system in about the quality and safety of island groundwa- selected inhabited islands of the Ari Atoll and built ter sources. With a projected 60 percent increase the capacity of the island councils and communities in the number of households by 2033, the next 20 to manage solid waste. The government has begun years will be critical for water and sanitation sector making significant changes to waste management development. regulations and has set up a dedicated department for waste management under the Ministry of En- Integrated approaches to water resource man- vironment and Energy. It has also taken steps and agement are needed to ensure sustainable secured additional resources to replicate and scale outcomes from expenditures and to foster in- up in the country’s Upper North and South Regions creased island-level water self-sufficiency. Ef- the integrated solid waste management system de- forts by the government, multilateral development veloped under the Maldives Environmental Man- banks and nongovernmental organizations to im- agement Project. prove the water and sanitation sector over the past nine years have been fragmented, and have yet to With some 200 inhabited islands spread over a result in achieving water security in the outer is- widely dispersed area, water resource manage- lands. The World Bank undertook analytical work ment and the provision of water and sanitation on the current and projected trends in water sup- services are expensive and complex. Changing ply and demand, providing guidance on appropri- environmental conditions and urbanizing popula- ate interventions to enhance water security, with tions are placing even more pressure on the sector. emphasis on economic efficiency, environmental Increasing salinity of island freshwater lenses im- sustainability and equity. 8 The Maldives is one of the world’s most vulner- elsewhere.4 On a per capita basis, however, green- able countries to climate change, particularly house gas emissions in the Maldives are the highest with regard to rising sea levels. With 96 percent in the South Asia region. of the islands occupying less than 1 km2 in area and over 80 percent of the Maldives less than 1 meter The complete reliance on fossil fuels for elec- above sea level, the country is particularly exposed tricity generation places a significant economic to the risks of intensifying weather events. Over the burden on the national economy. Imports of fos- sil fuels currently cost the Maldives more than 20 next 20 years, dry seasons are expected to be drier percent of its GDP each year. Furthermore, due to and longer, and wet seasons more wet, which has the high costs of domestic electricity production serious ramifications for water supply and sanita- and distribution -- the highest in the South Asia re- tion systems. The safe yield levels of groundwater gion -- the country has a long history of subsidized for islands are expected to decrease with rising energy prices. These universal subsidies represent sea levels; the minimum projected sea level rise of a fiscally significant burden, and improving their 1mm per year portends a decrease in the safe yield equity and financial sustainability is high on the of groundwater of at least 3 percent between 2012 government’s agenda. Greater independence from and 2030. Extreme rainfall events are likely to oc- carbon-based fuels, if achieved through energy ef- cur at twice the current frequency by 2050. High- ficiency improvements and use of indigenous re- er ocean temperatures increase the rate of coral newable energy resources, would provide energy bleaching and increase the risk of massive coral security and avoid the costly imports of fossil fuels. die-off during the local ocean temperature spikes The Maldives is working towards increasing the that occur during El Niño events (the severe 1998 use of renewables as a means for achieving energy El Niño raised sea surface temperatures around the security and following a low carbon development Maldives by as much as 5°C). path for climate change mitigation. Success in this endeavor will serve as an example to other devel- Successive governments have placed climate oping nations, and will be of particular interest to change issues high on the development agenda. small island developing states that come under the One of the principle engagements of the World Bank SIDS DOCK5 umbrella. The chairmanship of this on this front was the establishment of the multi-do- group currently lies with the Maldives. nor Climate Change Trust Fund in 2009 to support adaptation and mitigation measures to combat The World Bank is supporting the govern- climate change. With funding from the European ment’s efforts to move towards a low carbon Union and the Australian government, projects un- development path. Emphasis is being placed on der the trust fund have provided crucial support to shifting away from diesel as the primary fuel for the government to effectively monitor and manage electricity generation and on acquiring the neces- environmental risks to fragile coral reefs and other sary technical and institutional capacity in renew- wetland habitats, and have demonstrated island able energy technologies and operations in order level integrated solid waste management, climate- to make a seamless transition in this respect. The resilient drinking water solutions and renewable Clean Energy for Climate Mitigation Project under energy development. A second phase of the Climate the Maldives Climate Change Trust Fund program Change Trust Fund is now under implementation. demonstrated the techno-economic viability of in- tegrating renewable energy technologies into the While the Maldives is not a major emitter of power mix in island communities. The project has greenhouse gases, it is highly impacted by the effects of climate change attributed to global greenhouse gas emissions. In 2011, total carbon 4  Total carbon emissions in Sri Lanka are 12.3 million tons of emissions in the Maldives were 1.1 million tons CO2 (tCO2); in India 1,600 million tCO2; in Germany 787 million of carbon dioxide equivalent, contributing a mere tCO2; and in the USA 5,800 million tCO2. 0.003 percent of global carbon emissions. Under 5  SIDS DOCK is an initiative among member countries of the business as usual conditions, greenhouse gas emis- Alliance of Small Island States (AOSIS) to provide the SIDS with collective institutional mechanisms to transform their national sions could double by 2020, although this would energy sectors for sustainable economic development and help still be much lower than other emitters in Asia or SIDS address adaptation to climate change. Maldives Country Snapshot 9 provided a successful model for future interven- tions in carbon mitigation in the Maldives. Health The Maldives is a participating nation in the While sustained investment in the health sec- Scaling-Up Renewable Energy Program (SREP) tor has enabled Maldives to make remarkable for low-income countries. As the only small island progress in its health-related Millennium De- state that is part of this program that sits under the velopment Goals (MDGs), new challenges have global Climate Investment Funds, the Maldives is emerged. Maldives achieved substantial progress able to tap into significant grant and concessional in health-related MDGs, well ahead of the 2015 financing to support its renewable energy develop- deadline. Infant mortality rates dropped to nine ment agenda. These funds are, in turn, expected to deaths per 1,000 live births in 2011 compared to leverage additional resources, notably from the pri- 20 deaths in 1999.6 There is near-universal (99 vate sector, as well as from the World Bank Group, percent) immunization coverage, and immuniza- the Asian Development Bank (ADB), and other tion has been consistently above 96 percent since bilateral financiers and donors. A strong partner- 1999. Maternal mortality decreased to 57 deaths ship between The World Bank Group and the ADB per 100,000 live births in 2008 and further to 31 has facilitated a transformation in the sector and per 100,000 live births in 20137 from 115 deaths its economics, and developed innovative financing in 1999. Maldives maintains its sustained control schemes through the scale-up of renewable energy over communicable diseases, keeping the regional technologies in the country. The government com- record of malaria-free zone since 1984 and with pleted a comprehensive investment plan, which no cases of such vaccine-preventable diseases as was approved by the SREP sub-committee. measles, rubella, neonatal tetanus, pertussis and diphtheria registered since 2010. HIV prevalence As part of the SREP Investment Plan, the gov- continues to be low, even among the most-at-risk ernment requested World Bank support for population. Current estimated HIV prevalence is Accelerating Sustainable Private Investments less than 30 per 100,000 population.8 in Renewable Energy (ASPIRE). The ASPIRE pro- gram, approved in June 2014, has been designed to While these indicators are impressive when leverage International Development Association compared to other countries in the region, they (IDA) and SREP funds to attract other donors and compare less favorably to other nations with private-sector investments for the development of equal levels of income or with the same levels renewable energy projects. It combines technical of per capita health expenditure. Several other assistance, concessional financing and innovative challenges have also emerged, often at a magnitude risk-mitigation instruments to provide confidence not seen elsewhere in South Asia. Non-communica- to private-sector investors in a nascent market. ble diseases account for 81 percent of total deaths The project, designed as a partial risk guarantee in Maldives, the main killers being cardiovascular supporting standardized project contracts in the diseases (39 percent of all deaths), chronic lower photovoltaic (PV) sector, has just completed the respiratory diseases (7 percent), cancers (6.9 per- bidding process for its first sub-project for rooftop cent), and diabetes (3.2 percent)9. Maldives has a solar in the Greater Male Region. The government very high prevalence of people who are overweight has drawn on support from the World Bank and (53 percent of females and 30 percent of males) SREP to address several key barriers in the renew- and of obesity (abdominal obesity rates are 25 per- able energy sector, including the challenges of a cent among men and 54 percent among women). small market size, lack of track record for private With a carrier rate of 18 percent of the population, investments in this sector, currency and payment risks, and still evolving regulatory frameworks. The ASPIRE initiative seeks to move the sector towards increasing financial sustainability in a phased man- 6  Maldives Health Profile, Ministry of Health, 2012. ner. Over the program life, ASPIRE seeks not only 7 Trends in Maternal Mortality: 1990-2013. Estimates by to install between 20-35 megawatts (MW) of solar WHO, UNICEF, UNFPA, the WB and UN Population Division, WHO 2014. photovoltaic based generation, but also enhance local knowledge and expertise in this area through 8  WHO and UNAIDS Estimates 2013. targeted technical assistance. 9  WHO Annual Report 2014. 10 Maldives has the highest prevalence of thalassemia inform ongoing reforms to the country’s universal in the world. Disability is of particular concern in health insurance scheme, Aasandha, and its prede- the Maldives: people with severe permanent func- cessor, Madhana. These savings could be achieved tional limitations or disabilities have increased mainly through three channels: (i) by reducing the since 1980 from approximately 1 percent to 4.7 cost of medicines through the bulk procurement of percent of the total population in 2009.10 essential and generic drugs; (ii) by reducing expen- diture on overseas treatment through negotiation In recent years, Maldives has witnessed major of close-ended package rates with providers; and changes in the way health services are financed. (iii) through improved attention to early detec- One of the most significant changes was the intro- tion and secondary prevention of chronic diseases duction of Aasandha, a universal health insurance at the primary care level, which will be helpful in program, on January 1, 2012. The program was slowing down disease progress and delaying the expanded in February 2014 as Husnuvaa Aasand- occurrence of complications. Substantial capacity ha (Unlimited Aasandha). Aasandha benefits are building of the NSPA would also be needed to plan, comprehensive, covering most inpatient and out- implement and monitor these reforms. All these patient treatment including drugs and diagnostics. measures, while improving the scheme’s long-run Its main challenge, however, is fiscal sustainability. fiscal sustainability, will also have positive distri- Analysis of expenditure data from the HIES reveals butional implications. In particular, the decrease in a 42 percent increase in the real health per capita the cost of drugs would help the poorest segments expenditure over the period 2003/04 to 2009/10. of the population. The government has requested This increase occurred before the introduction of continued World Bank technical assistance with Aasandha and right at the onset of its predecessor, the ongoing reform process, with the objective of Madhana. The announcement of unlimited health improving the efficiency and sustainability of the insurance could potentially escalate health costs program and sustained financial protection for rapidly, while more cost-effective primary care and program beneficiaries. other intervention investments are on the decline. Measures to contain the total health expenditure and to improve financial protection of households Education against health episodes are the twin policy objec- tives that face Maldives’ policymakers. This also Maldives has performed well in providing ac- creates a strong case for system-wide reform in the cess to primary and lower secondary educa- health sector, rather than piecemeal, short-term tion, but lags sharply behind in education at- solutions. The recent history of a runaway rise in tainment at the upper secondary level. While the country’s total health expenditure -- both gov- the gross primary and lower secondary enrollment ernment and household -- continues to risk fur- rates have reached 104 percent and 117 percent, ther exacerbation by a health insurance program respectively, net rates are much lower, indicating that does not make adequate efforts toward cost considerable grade repetition or early school en- containment. Focus on adequate financial protec- tries. Furthermore, higher secondary gross enroll- tion for households, especially in the atolls (where ment is only about 35 percent, which is very low health expenditure has risen steeply as a share of by international standards. The average higher sec- total household spending) needs to be coupled ondary gross enrollment rate for middle-income with innovative purchasing of health services and countries is 61 percent, and for upper middle-in- improving the cost efficiency of the health system. come countries 84 percent. The main reason for the low enrollment in higher secondary education Operational savings in Aasandha could cut its in Maldives has been the limited number of schools cost significantly, while preserving the prin- offering grades 11-12. The government has ex- ciple of universal health insurance. The World panded this number to 51 schools: three in the cap- Bank has worked closely with the Ministry of Health ital Male and 48 in the atolls. Many of these schools, and the National Social Protection Agency (NSPA) however, are over-crowded and require more facili- to compile and analyze the necessary evidence to ties and equipment, stronger leadership and man- agement, and teacher development. Higher educa- tion participation is also low for a middle-income 10  MHRC: Disability Report, 2010. country. The gross higher education enrollment Maldives Country Snapshot 11 rate is only 6 percent. The main reasons for the low enrollment in higher education are the small flow WORLD BANK GROUP of students completing higher secondary education and moving onto higher education, and the limited PROGRAM IN MALDIVES provision of higher education in the country. There The World Bank Group Interim Strategy Note is one public university, the Maldives National Uni- for FY2014-FY2016 was presented to the Board versity, and about seven private education institu- in June 2014, setting out a selective program to tions. However, over 95 percent of enrollment in support Maldives during a period of transition these private education institutions is in pre-de- and uncertainty and laying the foundations for gree level diploma and certificate programs. the resumption of a full country program. In Increasing the quality of service provision to a light of the macroeconomic challenges facing Mal- standard commensurate with the country’s in- dives and drawing on lessons learned from the come levels is a challenge. Learning outcomes in FY2008-FY2012 Country Assistance Strategy11, the both primary and secondary education are modest, World Bank Group engagement during this tran- with substantial regional disparities. National as- sitional period aims primarily to deepen dialogue sessments of learning outcomes at grades four and and support on macro-fiscal issues while strength- eight have identified unsatisfactory levels of learn- ening the analytical foundations that would under- ing. At grade four, the average score of students in pin a future program. Given the uncertainty of the the English language is 32 percent and in math- environment, the World Bank Group engagement ematics 38 percent. In grade eight, student scores has been managed flexibly to respond to evolving in English and mathematics average 29 percent government needs and priorities. A new Country and 30 percent, respectively. The performance of Partnership Framework is under preparation, to students at national examinations has been rising take effect from FY2017. over time, but is still inadequate. Only 47 percent The World Bank lending envelope in the Mal- of students passed the General Certificate of Exam- dives has traditionally been limited. The IDA ination (Ordinary Level) and 39 percent the Gen- allocation for the Maldives is partially provided in eral Certificate of Examination (Advanced Level) in grants, given the country’s debt dynamics. At the 2014. end of August 2015, the portfolio comprised three Increasing the number of well-educated and IDA projects and one guarantee operation with a qualified Maldivians is extremely important combined net commitment value of $49 million for the country’s continued growth. At present, supporting education, environmental manage- the country depends heavily on expensive overseas ment, renewable energy, and public financial man- labor for technical, administrative and manage- agement. A significant body of analytical work and rial jobs, as there are insufficient Maldivians with non-lending technical assistance has underpinned higher secondary and tertiary level qualifications the World Bank program over the past few years, to take up these positions. Increasing the number including on human capital development, gender, of educated and highly skilled Maldivians would youth, water security, tourism, the national health boost the domestic labor market and reduce the insurance scheme, and targeting the poor. Re- reliance on expensive expatriate labor. The World sponding to the government’s interest in targeted Bank is supporting government efforts to expand and timely advisory support, the World Bank’s higher secondary education and improve the qual- non-lending program has also been extending both ity of primary and secondary education. Building “just in time” support and programmatic analytic on recent World Bank analytical work and earlier and advisory activities offering focused intermedi- lending operations in the education sector, the En- ate outputs. hancing Education Development project approved in April 2013 is focusing on education access and quality, particularly for primary and secondary 11  The last Country Assistance Strategy, discussed by the Board on January 8, 2008, covered the period FY08-12 and fo- education. The project covers the entire country, cused on economic governance and investment, human devel- including the outer atolls, in an effort to promote opment and environmental management and climate adapta- equitable growth and development. tion. 12 Given the size of the lending envelope, trust tions. IFC’s committed and outstanding investment fund resources continue to serve as a vital com- portfolio stood at $11 million at the end of July plement to the World Bank Group’s program, 2015, supporting tourism and housing finance. IFC supporting lending activities, technical assis- has recently completed an advisory project that as- tance and analytical work. As of the end of August sists with the development of a new act to regulate 2015, trust-funded activities totaled close to $16 non-bank financial institutions. IFC’s operations in million, benefiting energy and climate change ac- the Maldives are overseen by its Colombo office in tivities in particular. The Maldives Climate Change Sri Lanka. Trust Fund (CCTF) has supplemented the World Bank’s Environmental Management Project, ad- IFC’s support in Maldives has centered on two dressing clean energy, solid waste management, pillars: (i) inclusive growth, including increas- wetland conservation and coral reef monitoring. ing access to finance for micro, small and medium Trust funds have also been supporting analytical enterprises and improving infrastructure; and (ii) efforts on a host of critical issues, from youth de- sustainable growth, including promoting energy velopment to fiscal sustainability, and also are cur- efficiency and renewable energy. rently affording support for the Auditor General’s Office as well as for statistical capacity building. IFC’s operations have focused on four areas: tourism, the financial sector, infrastructure, Limited local implementation capacity and a and climate change mitigation. IFC has invested distant and dispersed population increase the in a number of businesses, including a leading ho- challenge of delivering timely and quality sup- tel operator in Maldives and a Maldivian sponsor’s port, especially when the program is small. South-South investment in Seychelles. IFC’s adviso- Distance increases delivery costs and weak imple- ry projects have included support for the Maldives mentation capacity often means limited progress Monetary Authority on a credit bureau, and draft- between missions, as local implementing agen- cies may lack expertise and support to address ing the Non-Banking Financial Institutions Act. the challenges that emerge. These factors become IFC also has completed projects promoting green even more constraining when authorities face a growth, such as advising on resort island energy ef- serious fiscal crisis or a difficult political environ- ficiency and on solid waste management for Male. ment. Capacity constraints are usually reflected in the project designs, and technical assistance to ad- MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA) dress capacity weaknesses will continue to remain important. INTERNATIONAL FINANCE MIGA supports the World Bank Group strategy CORPORATION (IFC) for the Maldives and stands ready to facilitate productive projects across sectors in the coun- try. Maldives provides a challenging environment Maldives became an IFC member country in for foreign investors. However, MIGA remains en- 1983. Since then, IFC has invested $157 million, in- gaged and is looking to provide support where it cluding $8.5 million mobilized from other institu- can do so on a sustainable basis. Maldives Country Snapshot 13 MALDIVES: ENVIRONMENTAL MANAGEMENT PROJECT KEY DATES: Approved: June 10, 2008 Effective: December 5, 2008 Closing: December 31, 2015 FINANCING IN MILLION US DOLLARS*: Financier Financing Disbursed Undisbursed IBRD IDA 16.45** 12.27 3.35 Govt. of Maldives 1.33 Other Total Project Cost 16.95 *As of August 31, 2015; Includes Additional Financing of $3.3m, approved April 22, 2015. BACKGROUND AND OBJECTIVES: Environmental pressures in the Maldives stem from its fragile geography, coupled with rising population densities, increased tourism, and changing consumption patterns. The country faces growing problems with solid waste management and pollution from sewage and other effluents emanating from urban settlements, hotels, fish-processing plants, ships, and other sources. The quantities of solid waste generated exceed disposal and treatment capacity. In addition, habitat degradation threatens marine assets such as coral reefs, while terrestrial threats include timber harvesting and destruction of mangroves. These environmental challenges could hamper the country’s economic growth especially if they undermine tourism. This project aims to establish a solid waste management system to reduce the risks of contamination associated with accumulated wastes and sea dumping. It also seeks to build human and technical capacity for environmental management. The four components of the project are: (i) a regional solid waste management program in the North Province, which is under-served by waste management facilities; (ii) capacity building for the country’s environmental agencies and regulators to manage the needs of a fragile environment; (iii) technical assistance for strengthened environmental management and monitoring to expand the knowledge base regarding critical natural resources; and (iv) project management and communications. In February 2014, the Bank approved the government’s request for a one-year extension of the project closing date to end-June 2015, a reallocation of project funds among existing disbursement categories and related revisions to certain project aspects. The Board approved additional financing of $3.3 million in April 2015 to support some cost overruns and allow the project to meet its objective of establishing and utilizing an integrated regional solid waste management system, with a six-month extension to the project closing date. Some of the cost overruns are being borne by the government of Maldives. KEY RESULTS ACHIEVED AND EXPECTED: Components 2 and 3 were completed in 2013, including the creation of a cadre of trained civil servants, enhanced access to information from environmental monitoring and research to support planning processes, and community participation in environmental management in 100 percent of the targeted islands to exceed the project target of 50 percent. A waste incinerator has been built on the designated uninhabited island, and the residual waste transfer vessels are expected to be completed by November 2015. A consultant to provide hands-on training to Fenaka Corporation, the state-owned entity responsible for managing and operating the regional solid waste management system, is expected to be on board by early October 2015. The project’s final target for the user fee collection in 50 percent of the participating islands under the original credit was achieved 1.5 years ahead of schedule. Overall, 62 percent of households in the participating islands are anticipated to pay user fees by end of the project period. Forty percent of the islands are carrying out waste segregation and composting. KEY DEVELOPMENT PARTNERS: The Ministry of Environment and Energy and the island councils of the North Province. 14 MALDIVES: CLIMATE CHANGE ADAPTATION PROJECT (CLIMATE CHANGE TRUST FUND) KEY DATES: Administrative Agreement (between World Bank and European Union signed: December 24, 2014 End Disbursement Date: June 30, 2018 FINANCING IN MILLION US DOLLARS: Financier Contribution (US$ million equivalent) EU 4.21 Govt. of Maldives .10 Total 4.31 BACKGROUND AND OBJECTIVES: This project is being implemented under the multi-donor Maldives CCTF that was established in 2009 to support a climate-resilient economy and society in the Maldives through adaptation, mitigation, and low-carbon development. The first phase of the CCTF was funded by the European Union (EU) and the Government of Australia, with a total allocation of $10.3 million. Three projects have been implemented under the CCTF to date, all completed on November 30, 2014: ■■ The Wetlands Conservation and Coral Reef Monitoring for Adaptation to Climate Change Project ($3.8m) supported community-based wetland management including ecotourism and drainage management on Hithadhoo island (Addu/Seenu Atoll) and Fuvahmulah island (Gnaviyani Atoll), rainwater harvesting on Ukulhas island (North Ari Atoll), coral reef monitoring (North and South Male Atolls), and capacity building for the local government. ■■ The Clean Energy for Climate Mitigation Project ($2.53m) supported solar energy generation, energy conservation and efficiency improvements, and technical assistance on G.Dh. Thinadhoo island. ■■ The Ari Atoll Solid Waste Management Pilot Project ($1.33m) supported the development of an island-level integrated solid waste management system in five pilot islands of the Ari Atoll and a residual waste transfer system for off-island disposal. With a supplemental EU contribution of €3.85m, a second phase of the CCTF (CCTF-II) is supporting the Climate Change Adaptation Project, aimed at helping the government to further implement activities undertaken under the Wetlands Conservation and Ari Atoll projects in the country’s southern-most atolls (Addu and Gnaviyani). The project aims, more specifically, to: (i) strengthen community wetland advisory boards in terms of formal recognition and institutional consolidation, and provide a mechanism for their continued involvement and improved capacity; (ii) strengthen the web-enabled database system developed under the first phase of the CCTF to ensure continued uptake, sustain confidence of tourist resorts in the National Coral Reef Monitoring Framework, and supplement it with a support facility for resorts; (iii) expand the involvement of tourist resorts beyond coral reef monitoring to mainstreaming climate change into resort management; and (iv) set up a system for waste management that is locally acceptable and operationally viable. KEY RESULTS ACHIEVED AND EXPECTED: Interventions in wetland management and solid waste management in the Addu and Gnaviyani Atolls are expected to benefit more than 4,800 households through enhanced tourism, livelihood opportunities, and ecosystem conservation. The coral reef monitoring intervention will directly benefit at least 10 private tourism operators. Through interventions in capacity building for mainstreaming of climate adaptation in island level planning, the project is expected to benefit all the 20 atoll councils and 66 island councils in the country and the communities serviced by these councils. KEY DEVELOPMENT PARTNERS: The Ministry of Environment and Energy, the Ministry of Fisheries and Agriculture, Ministry of Tourism, the Environmental Protection Agency, the Marine Research Center, Maldives National University, and atoll and island councils. Maldives Country Snapshot 15 MALDIVES: ENHANCING EDUCATION DEVELOPMENT PROJECT KEY DATES: Approved: April 30, 2013 Effective: July 26, 2013 Closing: June 30, 2018 FINANCING IN MILLION US DOLLARS*: Financier Financing Disbursed Undisbursed IBRD IDA 10 2.43 7.09 Govt. of the Maldives 1 Other Total Project Cost 11 *As of August 31, 2015 BACKGROUND AND OBJECTIVES: The project supports the government of Maldives to develop the education sector, with special focus on primary and secondary education. The operation was prepared through a process of consultation and collaboration with a broad range of stakeholders: the Ministry of Education (MoE), MoFT, the atoll education agencies, public and private employers, public and private education institutions, academics, and school principals, teachers, parents, and students. Prior to this project, the Bank had undertaken rigorous policy and technical analysis through a programmatic series of education-sector reports, whose findings and recommendations were incorporated into the project’s design. The project includes three components: (i) national-level education development; (ii) school-level education development; and (iii) project management, monitoring and evaluation, and program development. It is assisting the government in developing a system of national assessments of learning outcomes to inform education policy, and also conducting regular school- level quality assurance reviews to feed into school improvement activities. In addition, the project supports government efforts to develop a network of good quality secondary and higher secondary schools, and strengthen the human resource capabilities of education officials in the country’s atolls and the capital, Male’. The project is also helping the MOE prepare a master plan for the development of higher education. KEY RESULTS ACHIEVED AND EXPECTED: ■■ The survival rate through higher secondary education has achieved the 2015 end target rate (20 percent). ■■ Eighty percent of schools in 42 percent of atolls have been trained and are currently engaged in quality assurance school self-evaluation and school-based profes- sional development activities. ■■ There are 45 MoE staff members who have completed certificate level short-term training courses, and 10 MoE staff who have commenced masters or bachelor degrees in education. The MoE has also commenced a set of degree, associate degree and diploma programs for school principals, deputy principals, and leading teachers, with 82 candidates currently enrolled in these programs. ■■ The enrichment of physical learning environments of secondary schools has made substantial progress, with 23 secondary schools (out of 37 in the country) receiving information and communications technology equipment and associated material and software to date. ■■ The MoE is scheduled to conduct the national assessment of learning outcomes in September-October 2015. KEY DEVELOPMENT PARTNERS: MOE, UNESCO, UNICEF 16 MALDIVES: PUBLIC FINANCIAL MANAGEMENT (PFM) SYSTEMS STRENGTHENING PROJECT KEY DATES: Approved: June 26, 2014 Effective: October 2, 2105 Closing: July 31, 2019 FINANCING IN MILLION US DOLLARS*: Financier Financing Disbursed Undisbursed IBRD IDA 6.5 2.20 3.85 Government of Maldives Other Total Project Cost 6.5 *As of August 31, 2015 BACKGROUND AND OBJECTIVES: The project aims to enhance budget credibility, transparency, and financial reporting of central government finances. It will support three activities: (i) strengthening the public financial management environment by enhancing the legislative and institutional framework, the fiscal framework, and debt and cash management; (ii) strengthening the public accounting system to improve financial reporting practices and decision-making, as well as internal financial controls, internal auditing, and procurement management practices; and (iii) providing support for project management within the MoFT. KEY RESULTS ACHIEVED AND EXPECTED: The expected outcomes of the project are: (i) reduced deviation between actual expenditures and the original budget; (ii) increased and timely public access to key fiscal information; (iii) improved quality of debt data recording and reporting; and (iv) enhanced coverage and quality of the internal audit function. To date the project has: ■■ Completed an analysis of the legislative framework relevant to PFM, and identified a sequenced plan of revising/amending the laws. ■■ Upgraded the debt recording and reporting system, with the data reconciled; prepared a framework to issue sovereign guarantees, reviewed the draft National Debt Strategy with an aim to improving it; designed monthly and annual debt reports and conducted an assessment of the debt division’s internal organization structure and made recommendations to strengthen it. ■■ Trained MoFT staff on how to formulate a Medium-Term Macro-Fiscal Framework. Basic training has been delivered on macro-fiscal modeling to officers within and outside the MoFT, and a new Macroeconomic Policy Coordinating Committee has been established and an early draft macro-fiscal statement prepared. ■■ Prepared a business blue print on budgeting and a new budget calendar. Budget ceilings have been established for the FY 2016 budget based on the initial macro fiscal statement. ■■ Carried out urgent technical and functional upgrades in the public accounting system to closely monitor budget execution. System-generated budget execution reports comparing budgets with actual expenditures are being used, and commitments are gradually being captured in the system. KEY DEVELOPMENT PARTNERS: MoFT Maldives Country Snapshot 17 MALDIVES: ACCELERATING SUSTAINABLE PRIVATE INVESTMENTS IN RENEWABLE ENERGY (ASPIRE) PROGRAM KEY DATES: Approved: June 26, 2014 Closing: July 31, 2019 FINANCING IN MILLION US DOLLARS*: Financier Financing Disbursed Undisbursed IBRD IDA Guarantee** 16.00 16.00 SREP Grant 11.68 0.39 11.29 Other Total Project Cost 27.68 0.39 27.29 *As of August 31, 2015 **$4 million of IDA funds are being leveraged to provide $16 million of risk exposure in the form of a guarantee BACKGROUND AND OBJECTIVES: The ASPIRE program aims to increase solar photovoltaic generation in the Maldives through private-sector investment. The program will use a combination of grant funds from SREP and a series of IDA guarantees to attract private-sector investments and build capacity within the country to receive such investments. Its components are: (i) technical assistance to the government to enable private investing and strengthen institutional capacity building and knowledge sharing; (ii) a series of IDA guarantees to provide confidence to private investors; and (iii) tariff buy-down to ensure that tariffs obtained are within an acceptable range for utility and customer acceptance. KEY RESULTS ACHIEVED AND EXPECTED: About 20 MW of new power generation over the life of the program, beginning with four MW bid out for rooftop solar energy in the greater Male’ area. Results to be monitored will include the cumulative MW capacity installed as well as private capital mobilized in the country’s PV sector. KEY DEVELOPMENT PARTNERS: Ministry of Energy and Environment, MoFT, state-owned utilities STELCO and FENEKA, ADB. 18