OCTOBER 2016 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: World Bank 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 socioeco- education. nomic development. Maldives shares many of the development challenges of other Small Is- Maldives’ model of economic development, land Developing States (SIDS), such as: a small could be more inclusive and its future sus- domestic market; a narrow and fragile resource tainability is at stake. Although this economic base; a shortage of skilled manpower; difficult model, based on tourism-led growth and redis- inter-island transport and communication; high tribution of tourism-generated revenues, has cost of social and economic infrastructure pro- contributed to improving the wellbeing of the vision; heavy dependence on external trade; Maldivian population, poverty reduction has and vulnerability to external shocks and natural been below potential and the level of inequal- disasters. These challenges are compounded, ity -- and lack of shared prosperity -- remain a in the case of Maldives, by the country’s high major challenge. Recent political and socio-eco- geographic dispersion, with 1,190 coral islands nomic developments have, moreover, brought to (199 of which are inhabited) grouped in 26 evidence the inherent vulnerability of Maldives’ atolls, spread over roughly 90,000 square ki- development and raise concerns about its fiscal, lometers. With more territorial sea than land, environmental and social sustainability. marine resources have played a vital role shap- ECONOMIC OVERVIEW such, there is a risk of rising external debt distress. A more gradual fiscal expansion and prioritization of investment projects are needed to lift growth to a moderate level while maintaining macroeconomic stability. MALDIVES 2014 Recent Developments Population(1) 409,163 GDP (USD mn) 3,143 After peaking at 6.5 percent in 2014, tour- ism growth is expected to decelerate to 1.9 GDP per capita (USD PPP) 12,637 percent,1 due to a slowdown in tourist arrivals, GDP per capita (USD) 7,681 especially from Russia and China. While tourism (1) includes foreign residents is still the single largest sector contributing to the Sources: National Bureau of Statistics (through World Development Indicators) Maldives Monetary Authority, WDI, staff calculations economy, construction has become the main driver of growth, fueled by a surge in public and private investments. Construction has become the main driver of growth since late 2014, while tourism that used to drive the economy has been affected by a decline in number of visitors, partic- ularly from Russia and China. The medium-term fiscal plan 1  Staff projections. The official final macroeconomic num- is anchored by large multi-year public investment projects. bers for 2015 are not yet available. The Maldives Monetary Au- thority monthly bulletin of August 2016 published preliminary Public debt is expected to deteriorate in the medium-term estimates for GDP growth, the fiscal deficit and the current ac- with large multi-year public investment projects planned count deficit for 2015. Until these numbers are final, staff esti- whose growth impact will not be seen immediately. As mates for 2015 are used in this analysis. Maldives Country Snapshot 1 2016 fiscal policy is expan- Contributors to GDP Growth sionary with large public investment projects. Staff 10 projects revenue to reach 35.6 Construction percent of GDP and expenditure 8 Tourism 48.9 percent of GDP. Wages are 6 Total GVA at basic prices projected to be frozen in nomi- nal terms, while the budget 4 foresees significant reduction 2 in electricity and food subsidies. The budget includes a number 0 of large multi-year investment -2 projects: airport expansion, a -4 bridge between the capital Malé Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 and Hulhumalé Island and hous- 2011 2012 2013 2014 2015 2016 ing construction in Hulhumalé island. The slowdown in tourism in The global decline in commodity prices has led 2015 has led to a decline in net service exports. to a decrease in CPI inflation since 2013, which The import bill of petroleum products declined became negative in April 2016 (year-on-year). with low global commodity prices, which was par- Main factors for this decrease include lower prices tially offset by increases in import of transport in food (mainly fish), housing, water, electricity, gas equipment and building materials for construction and other fuel, and transportation. purposes. The current account deficit is estimated at 8.8 percent of GDP, financed by strong FDI in- Maldives’ high levels of fiscal deficit and public flows into the tourism sector. Gross official reserves debt pose a significant risk, as the country is reached $623 million in July 2016, although usable structurally spending beyond its means. While reserves are only $209 million—equivalent to 1.2 the cost of public service delivery is high in a months of imports of goods and services. However, multi-island country with its population scattered this is less of a concern since the tourism industry across the islands, public spending in recent years supplies sufficient quantities of foreign exchange at have increased primarily due to the country’s re- a stable premium over the de facto fixed exchange distributive model, including high public sector rate of 15.4 rufiyaa per dollar. wage bill, pensions, universal health insurance and subsidies for food and electricity, and transfers to Outlook state-owned enterprises. It is estimated that revenue and public spend- In the near term, growth is expected to be driv- ing have increased to 36 and 44 percent of GDP en by construction, fueled by both private sec- respectively in 2015, resulting in a fiscal deficit tor construction and large public investment projects, while tourism growth is likely to re- of 8.4 percent of GDP.2 While net external financ- main subdued because of a slowdown in China, ing has been negative in 2014 and 2015, reliance the recession in Russia, the appreciation of on domestic sources of financing has increased the the MVR (pegged against the USD) against ma- exposure of the domestic banking system to sover- jor currencies. Inflation is projected to remain eign risk. In response to the rapidly rising domestic subdued as long as global commodity prices re- interest rates, Treasury bill auctions were replaced main low, with positive impacts on the current by a “tap system” fixing interest rates at low levels and fiscal accounts. in mid-2014. The planned large increase in front-loaded capital investment has increased the risk of 2  Ibid. external debt distress to high according to the 2 2013 2014 2015p 2015e 2016f 2017f 2018f Real GDP growth, at constant market prices 4.7 6.5 2.1 1.9 3.5 3.9 4.6 Private Consumption ... ... ... ... ... ... Government Consumption ... ... ... ... ... ... Gross Fixed Capital Investment ... ... ... ... ... ... Exports, Goods and Services ... ... ... ... ... ... Imports, Goods and Services ... ... ... ... ... ... Real GDP growth, at constant factor prices 4.2 5.9 3.5 ... ... ... ... Agriculture 5.1 0.2 -2.9 ... ... ... ... Industry -7.6 12.9 26.0 ... ... ... ... Services 6.4 5.0 -0.1 ... ... ... ... Inflation (Consumer Price Index) 2.3 2.1 1.0 0.4 1.3 2.5 2.8 Current Account Balance (% of GDP) -4.6 -3.9 8.8 -8.0 -7.7 -11.7 -14.6 Financial and Capital Account (% of GDP) 2.6 17.8 11.4 6.7 9.7 16.8 17.7 Net Foreign Direct Investment (% of GDP) 13.0 10.9 9.6 10.6 10.0 10.9 10.8 Fiscal Balance (% of GDP) -7.4 -9.1 -6.9 -8.5 -13.0 -13.8 -11.9 Debt (% of GDP) 64.8 66.6 63.9 72.1 81.9 91.0 96.9 Primary Balance (% of GDP) -4.9 -6.3 -4.4 -5.5 -10.5 -10.5 -7.7 Source: Maldives Monetary Authority, Ministry of Finance and Treasury, World Bank staff estimates for 2015 and forecasts for 2016-2018. Note: p = preliminary estimate published in MMA bulletin, e = World Bank estimate, f = World Bank forecast most recent Debt Sustainability Analysis.3 A ductions in tourism visits, which will put pressure more gradual implementation could mitigate this on growth, revenue and the balance of payments. risk but without additional expenditure and rev- enue measures this could still lead to fiscal deficit There are limited investment opportunities in the of close to 14 percent of GDP with the public debt- private sector outside tourism, and banks prefer to to-GDP ratio approaching 100 percent. park their available assets at the central bank and abroad. Challenges RECENT SECTOR DEVELOPMENTS The immediate macroeconomic challenge is to address the fiscal and external imbalances driven by high and rising public spending. The projected fiscal path is not enough to bring public debt-to-GDP trajectory on a declining path. Restor- Public Financial Management ing debt sustainability would require significant fiscal consolidation by raising revenue and reduc- Institutional weaknesses in public financial ing expenditure. Limited international reserves, a management have undermined the govern- high level of public debt and the short maturity of ment’s capacity to undertake necessary fiscal domestic debt adds additional vulnerability. adjustments in an efficient manner. A Public Expenditure and Financial Accountability (PEFA) Meanwhile, political risks and a slowdown in coun- assessment carried out by the IMF jointly with the tries important for tourism could lead to further re- World Bank and the government in early 2014 un- derscored the need for significant improvements in the country’s public financial management sys- 3  Joint World Bank-IMF Debt Sustainability Analysis, included tems -- notably in the areas of budget credibility in the IMF Article IV report of May 2016. and predictability as well as control in budget ex- Maldives Country Snapshot 3 ecution, accounting and reporting. A comprehen- try from maximizing benefits and enhancing inclu- sive legislative framework and robust organiza- sive growth, while concerns over the investment tional structures for public financial management climate and political risk may undermine the abil- institutions also are lacking in the country. State ity of Maldives to attract reputable investors in the oversight of state-owned enterprises is particu- future. The industry has developed as an enclave, larly problematic insofar as there is no systematic with limited positive spillovers to the local com- financial reporting, auditing, or accounting for de munities. facto transfers made under several budget catego- A more inclusive tourism industry may hold ries. the key to shared prosperity in the country. The World Bank is providing support to Better linkages between the resorts and local en- strengthen Maldive’s public financial manage- terprises may help to leverage tourism growth for ment systems. Building on the PEFA assessment, development of other tradable sectors. Tourism a project was prepared and approved in June 2014 is a large and rapidly growing source of jobs, but designed to enhance budget credibility, transpar- most of them are not taken up by the local popula- ency, and financial reporting of central govern- tion due to such factors as: a reservation wage that ment finances. The project also supports greater is too high for unskilled jobs; lack of skills for tech- and more efficient usage of the existing Public Ac- nical and managerial jobs; social norms; and the counting System as a tool for better budget execu- lack of adequate transport. A nascent segment of tion, internal control, cash management, account- community-based tourism, such as locally owned ing, and fiscal reporting in addition to supporting guesthouses, may represent a valuable option for diversification and inclusive growth through in- the National Tender Division by benchmarking and tegration with local communities. Growth in this strengthening procurement functions. The exter- segment has some limitations and risks. There are nal audit function is being supported under a par- still unrealized opportunities for linkages between allel Institutional Development Fund grant to build tourism and local providers of fish and agriculture the capacity of the Auditor General’s Office with a products. Opportunities for service-provision link- view to enhancing the scope and impact of audit ages are more limited, as many resorts already services it provides. own and operate their support services and ancil- lary functions. Growth Prospects The fisheries sector is a critical contributing sector for the country’s national economy and Tourism is the most important industry in Mal- forms the most important primary economic dives, but the linkages with the local economy activity in almost all of the country’s inhabited are limited. Tourism constitutes by far the biggest islands. Before the development of tourism, fish- contributor to GDP at 28 percent, and is the great- eries was the most important industry and source est generator of foreign exchange earnings at more of growth for Maldives. Although the relative im- than 60 percent in 2014. Revenue from the sector portance of the fisheries sector has declined since accounts for 38 percent of government revenue, the late 1970s (due mainly to the rapid growth of derived from various taxes and lease of islands.4 tourism), its role in the Maldivian economy (and Although Maldives has managed to position itself culture) remains significant. Fisheries remain a as a high-end destination, the sustainability of large source of employment, the largest source of such premium cannot be taken for granted. Gov- physical exports, one of the few local industries ernance shortcomings in the current model for supplying the touristic resorts, and a major source allocation of resort leases may be hampering the of food supply for the local market. In 2014, it ac- development of tourism and preventing the coun- counted directly for 1.7 percent of GDP and, rep- resents a much larger share of employment and livelihood. . 4   This includes all tourism-related taxes: (part of) import duty, Tourism tax, GST on Tourism, Airport Service Charge, Roy- The sustainability of fisheries is, however, jeop- alties, land and resort rent, Business Profit Tax. ardized by inadequate fisheries management 4 and overfishing. The industry is experiencing a crises, Maldives has integrated food security con- declining trend, with both catch and employment siderations into national planning. It has removed falling. Employment of women in the downstream tariffs on imported food items, agricultural inputs fish processing industry has been reduced to prac- and fuel, and is looking for ways to intensify and di- tically nil. Maldives’ fisheries sector benefits from versify agriculture and fisheries. The government high value stocks, but its recent trends highlight is working with international agencies and private vulnerability to a mix of factors, including over- sector partners to develop agriculture by introduc- fishing, higher fuel costs, temperature rise lead- ing new and innovative techniques and technology ing to change in schools aggregation, and lack of to strengthen the contribution of farming to rural more effective regional eco-systemic management development. Agriculture is a relatively minor ac- of the shared skipjack tuna stock. Governance de- tivity in Maldives and has contributed only margin- ficiencies (limited number of skipjack tuna pro- ally to long-term growth. Potential for agriculture cessing licenses) appear to have hampered the de- is limited due to the scarcity and dispersion of ar- velopment of fisheries and the value they bring to able land and high cost of fresh water for irrigation, the economy. Overfishing of reef fish and climate and the country will remain dependent on import- change present risks to the sustainability of the ed food into the future. tuna fisheries as well as tourism. Threats to the health of the coral reefs that are significant to the There are a number of opportunities to capi- fishery sector also come from habitat degradation talize on agriculture for local income growth. and loss due to pollution, harbor construction and While no official data exists, the linkages between reclamation. local agricultural production and the tourism in- dustry are still limited. Anecdotal evidence sug- Maldives has the opportunity to further devel- gests that concerns about the volume, quality, and op its fisheries sector, and to capitalize on the reliability of local production significantly reduce potential benefits to enhance economic growth the incentives for resorts to source agricultural and sustainable development at a national lev- produce locally, in favor of imports. Despite that, el. As sustainable and inclusive growth of the fish- market participants from both supply and demand eries sector will likely not be based on increasing consider that there may be potential to further and the volume of catch, a transition to a wealth-based more systematically exploit comparative local ad- fisheries management system may hold promise vantage in the production of various fruits and veg- for the future. There are a range of targeted op- etables to cater to the resorts. Such an emphasis tions for exploiting the opportunities presented to may have the added benefit of increasing women’s Maldives fisheries sector at present, but effective employment, since agriculture has a predominant- strategies and plans will need to be developed to ly female labor force (women represent 60 percent identify not only economic potential, but also envi- of total employment in agriculture). Currently, ronmental impact. The World Bank is expected to mostly bananas, melons and papaya are produced provide financing support to a Sustainable Fisher- locally for resorts but it may be worthwhile to ana- ies Resources Development Project in FY2017. lyze more systematically what other high-value fruits and vegetables are suitable for cultivation. Food security concerns have revitalized inter- In addition to broadening production choices and est in the development of local agriculture pro- testing cultivation feasibility of a larger pool of duction. Maldives produces less than an estimated fruits and vegetables, the feasibility of low-cost 10 percent of its food requirements, reaching self- smallholder greenhouse technologies combined sufficiency in fish only. Except for coconut and with household based-irrigation/ ‘fertigation’5 sys- fresh tuna, 90 percent of all food items are import- tems could be explored. ed. Food imports are required not only to meet do- mestic food demand for the Maldivian people but are also essential to cater to the tourism industry in Maldives. Import dependency, limited storage facilities and ad hoc distribution pose food secu- rity risks. In response to the recent food and fuel 5   Fertigation is the combined application of water and nu- trients to a crop – a mix of fertilizer and irrigation. Maldives Country Snapshot 5 er parity terms was 4.9 percent, whereas the corre- Finance and Markets sponding share using the $2.00-a-day poverty line was 17.02 percent. These figures are very similar Healthy financial development is important to to the average poverty outcomes of upper middle spur Maldives’ SME sector, diversify the econo- income countries, two of the small Pacific islands, my, boost job creation and social inclusion, and and neighboring Sri Lanka. manage some fiscal issues. Financial sector de- velopment has a strong role to play in unleashing Poverty declined nationwide between 2003 economic opportunities for the Maldivian popula- and 2010, although not uniformly across Mal- tion and firms as well as in helping the government dives’ territory. Poverty declined in the atolls manage its fiscal risks. The 2016 Financial Sector while it remained stable in the capital area Malé. Assessment Program (FSAP, Development Module) The poverty rate is the highest in the Central North was recently carried out, which analyzed the rea- and Southern Atolls, while the capital area Malé is sons behind financial inefficiencies in the Maldives, home to the largest share of poor individuals. Sus- including unintended consequences of existing tained migration from the atolls to the capital ac- policies, to propose a reform agenda to advance fi- counts for most of the diverging poverty trends at nancial development. the subnational level. Financial inclusion efforts face challenges in Despite progress, the pace of poverty reduction Maldives due to the small scale of the market has been below potential when considering and much dispersed geography of islands. The the fast GDP growth of the Maldivian economy monopolistic market structure holds back further between 2003 and 2010. The growth elasticity gains in financial development. There is also a need of poverty reduction in Maldives of about 1.2 per- to strengthen enforcement of existing regulation cent is relatively low by international standards. and to address the distortionary effects of govern- This is evident in comparison to other countries. ment policies that constrain greater competition in For example, while Maldives and Sri Lanka shared financial markets. Although growing significantly, the same growth rate (approximately 4.8 percent the Islamic banking sector is still underdeveloped a year over the period), poverty reduction in Mal- as evidenced by limited product diversity and geo- dives was one-third less than experienced in Sri graphic outreach. Lanka.6 Given the slow pace of poverty reduction, Maldives will be able to reduce extreme poverty The 2016 FSAP identified five areas of focus for under 1 percent by 2040, a much longer period strengthening the financial market. These areas than upper middle-income countries, and other include: (1) addressing the gaps in basic financial countries in South Asia. The lack of shared pros- market infrastructure, (2) reforming institutions, perity in Maldives is the main determinant of the building regulatory capacity, and strengthening limited impact of growth on poverty reduction. regulatory enforcement, (3) implementing poli- The unequal impact of growth is further reflected cies to boost financial efficiency, (4) establishing by an increase in the gap between the poorest and comprehensive financial consumer protection and richest segments of the population. rationalizing financial inclusion programs, and (5) diversifying financial intermediation by promoting Limited job opportunities, especially for low further development of Islamic finance and by res- skilled labor may have played an important urrecting the domestic bond market. role in limiting the contribution of growth to poverty reduction. The lack of growth in fisheries Poverty and Shared Prosperity is a particularly important determinant of the lim- ited contribution of growth to poverty reduction, Poverty incidence in Maldives is substantially especially in the atolls. As labor income is the main in line with that of an upper middle-income source of household income for the poor, an inclu- country. According to the latest available House- hold Income and Expenditure Survey (HIES) col- lected in 2009/10, the share of population living 6   Poverty decreased at about 0.5 percent per year in Mal- with less than $1.25 a day in 2005 purchasing pow- dives as opposed to 1.6 percent in Sri Lanka. 6 sive development of the labor market is key for re- 2015 offers insights in this connection and will ducing poverty and boosting shared prosperity. serve to inform the World Bank Group’s forthcom- ing Country Partnership Framework and strategy There is a need to address youth unemploy- for engagement in the Maldives. Knowledge has ment. 45 percent of Maldive’s population is under also been deepened through recent analytical work the age of 24 years. According to the latest House- undertaken on gender and youth in the Maldives. hold Income and Expenditure Survey (2010), 25 percent of youths in the age group of 15-24 years were unemployed, which is more than double the Social Protection rate of the total work force. Growing youth unem- ployment and ensuing social discontent may un- Notwithstanding the significant achievement dermine the goal of shared prosperity. in reducing poverty, it remains a concern in some atolls and vulnerability continues to be Maldives performs better than the other coun- high. The World Bank has been assisting the gov- tries in South Asia with respect to various so- ernment in the design and implementation of so- cio-economic indicators and gender equality. cial protection reforms that aim to strengthen the Compared to other countries in South Asia, Mal- effectiveness of pensions and social assistance dives ranks first in terms of per-capita GDP and is programs to help households mitigate and cope second only to Sri Lanka based on the Human De- with risks and to provide income support to poor velopment Index ranking. In 2010, life expectancy households. In collaboration with the government, at birth was 76.8, three years higher than both the the World Bank prepared an analytical report titled average for upper middle-income countries and “Social Protection in the Maldives: Options for Re- Sri Lanka, the second best of the South Asia region. forming Social Assistance and Pensions” that out- Maldives’ performance is also better than the av- lined major strategic directions for reform. Build- erage upper middle-income country with respect ing on this analytical work, a World Bank project to infant mortality rate, although it is second to Sri has supported the establishment of a fiscally Lanka in the South Asia region. sustainable pension system and a strong pension Maldives fares significantly better than many administration agency. The newly introduced de- countries when it comes to gender equality. The fined contributory pension scheme has expanded country ranks 49th on the Gender Inequality Index the coverage beyond public employees to include in the 2014 Global Human Development Report of all formal sector workers and is being rolled out the United Nations Development Programme. The to self-employed workers. Additional technical and island nation has the fewest disparities between financial support has been provided to build insti- men and women, when compared with other so- tutional capacity to effectively deliver all social called medium human development countries as safety net benefits, including development of an well as its South Asian neighbors. The country has integrated Social Protection Information System attained gender parity in primary and secondary with a targeting module. While progress has been enrollment, and the number of Maldivian women made in recent years to expand safety net cover- attaining university degrees is at par with that of age and build the benefits delivery system, several men. At the same time, continued effort is needed important challenges remain. in promoting gender equality, including in political representation where women account for 6 per- The financial sustainability of several untarget- cent. Gains in gender equality observed in educa- ed social protection programs is a fundamental tion, health, and other developmental outcomes challenge. That is particularly the case for the near do, however, run the risk of being tempered by in- universal electricity subsidy program, the overly creasingly conservative social and cultural norms. generous universal health insurance scheme, and the expensive Senior Citizen Allowance, the lat- Analytical work supported by the World Bank ter of which comes on top of the old-age pension is shedding further light on the constraints to benefit. World Bank technical assistance has sup- and opportunities for reducing poverty and ported the design of a new targeting mechanism, boosting shared prosperity in the Maldives. which combines a proxy means-testing approach The Systematic Country Diagnostic carried out in and cross-validation of self-reported information Maldives Country Snapshot 7 with existing administrative databases. The gov- and unsustainable exploitation of high-value reef ernment has piloted this targeting mechanism and resources. Terrestrial threats include timber har- plans to apply the mechanism in the electricity vesting and destruction of mangroves, while pol- subsidy program shortly. The World Bank project lutants from numerous sources lead to coral reef has supported the development of a social registry damage. These environmental challenges could of all households that have re-applied for the elec- hamper the country’s economic growth, especially tricity subsidy. if they undermine tourism. Environmental management is constrained by Environment, Climate Change and Energy the lack of technical and managerial capacity to deliver the required infrastructure to moni- Environmental sustainability is the funda- tor and control environmental impacts. The mental development challenge in the country. World Bank-supported Maldives Environmental Biodiversity-based sectors contribute more than Management Project addressed these constraints, 70 percent of national employment, over half of developing an integrated solid waste management public revenues, almost all exports, and close to 80 system in the North Central Region. The project percent of GDP. Indeed, the new constitution man- has already built capacity for environmental man- dates the protection of the environment as a key agement through the creation of a cadre of trained citizen’s right, demonstrating its importance to the civil servants, introduction of a degree program at future development and prosperity of the country. the Maldives National University, and enhanced From an economic growth and development stand- monitoring and stewardship of terrestrial and ma- point, the management of the country’s natural re- rine resources. With financing from the Maldives sources and complex ecosystems will continue to Climate Change Trust Fund, the World Bank also determine the Maldives’ comparative advantage recently supported the Ari Atoll Solid Waste Man- and growth prospects into the future. Both the gov- agement Pilot Project to demonstrate an island ernment and its development partners realize the level integrated solid waste management system in importance of environmental sustainability and are placing a high priority on work in this regard. selected inhabited islands of the Ari Atoll and built the capacity of the island councils and communities Environmental management is a national pri- to manage solid waste. The government has begun ority that has underscored successive national making significant changes to waste management development and tourism plans. Environmental regulations and has set up a dedicated department pressures stem from the country’s fragile geogra- for waste management under the Ministry of En- phy, compounded by rising population densities, vironment and Energy. It has also taken steps and increased tourism and changing consumption pat- secured additional resources to replicate and scale terns. The Maldives faces growing problems with up in the country’s Upper North and South Regions solid waste management and pollution from sew- the integrated solid waste management system de- age and other effluents emanating from urban set- veloped under the Maldives Environmental Man- tlements, hotels, fish-processing plants, ships and agement Project. The World Bank is expected to other sources. The quantities of solid waste gener- provide financing for a Solid Waste Management ated exceed disposal and treatment capacity. Most Project in FY2017. wastes are dumped onto the island foreshore and burned at low combustion temperatures. Uncon- With some 200 inhabited islands spread over a trolled waste disposal and floating debris at tourist widely dispersed area, water resource manage- resorts are the most visible threats to the country’s ment and the provision of water and sanitation reputation as a pristine high-end tourist destina- services are expensive and complex. Changing tion. Habitat degradation threatens marine assets. environmental conditions and urbanizing popula- Coral mining for construction and dredging of la- tions are placing even more pressure on the sector. goons for reclamation is the most prevalent cause Increasing salinity of island freshwater lenses im- of reef destruction. Other pressures include dam- mediately following the 2004 tsunami and pollu- age caused by divers, illegal collection of corals, tion of aquifers by human waste have reduced use 8 of historically important groundwater as a potable The Maldives is one of the world’s most vulner- water source in the islands. The low-lying land ar- able countries to climate change, particularly eas of the Maldives make it particularly vulnerable with regard to rising sea levels. 42 percent of to rising sea levels -- with associated saltwater in- the population and more than 70 percent of criti- trusion and flooding problems. Limited rainwater cal infrastructure are located within 100 meters of harvesting capacity, the high cost of desalination, shoreline. With 96 percent of the islands occupy- and financial and institutional capacity constraints ing less than 1 km2 in area and over 80 percent of have made progress in improving water manage- the Maldives less than 1 meter above sea level, the ment in the nation’s inhabited islands difficult. country is particularly exposed to the risks of in- tensifying weather events. Over the next 20 years, The unique geographic attributes of the Mal- dry seasons are expected to be drier and longer, dives make its water resource situation both and wet seasons more wet, which has serious ram- complex and diverse. With populations on the is- ifications for water supply and sanitation systems. lands ranging from 55 to 120,000 inhabitants, even The safe yield levels of groundwater for islands basic water and sanitation service must be tailored are expected to decrease with rising sea levels; the to local resources and population needs. Manage- minimum projected sea level rise of 1mm per year ment of the limited water resources is complicated portends a decrease in the safe yield of groundwa- due to the small catchment areas for rainfall, lim- ter of at least 3 percent between 2012 and 2030. ited rainwater and groundwater storage capacity, Extreme rainfall events are likely to occur at twice long dry seasons, and the susceptibility of ground- the current frequency by 2050. Higher ocean tem- water aquifers to pollution from poor sanitation peratures increase the rate of coral bleaching and and salinity intrusion. As an indication of both increase the risk of massive coral die-off during the water scarcity and low island-level water self- local ocean temperature spikes that occur during sufficiency, more than 100 islands have requested El Niño events (the severe 1998 El Niño raised sea shipments of “emergency water” to be delivered surface temperatures around the Maldives by as from Male during the annual dry season since much as 5°C). 2005. The limited ability of the islands to supply sufficient water for residents is in large part due to Successive governments have placed climate underutilization of existing infrastructure and lack change issues high on the development agenda. of knowledge about the quality and safety of island One of the principle engagements of the World groundwater sources. With a projected 60 percent Bank on this front was the establishment of the increase in the number of households by 2033, the multi-donor Climate Change Trust Fund in 2009 next 20 years will be critical for water and sanita- to support adaptation and mitigation measures tion sector development. to combat climate change. With funding from the European Union and the Australian government, Integrated approaches to water resource man- projects under the trust fund have provided cru- agement are needed to ensure sustainable cial support to the government to effectively moni- outcomes from expenditures and to foster in- tor and manage environmental risks to fragile creased island-level water self-sufficiency. Ef- coral reefs and other wetland habitats, and have forts by the government, multilateral development demonstrated island level integrated solid waste banks and nongovernmental organizations to im- management, climate resilient drinking water so- prove the water and sanitation sector over the past lutions and renewable energy development. A sec- nine years have been fragmented, and have yet to ond phase of the Climate Change Trust Fund is now result in achieving water security in the outer is- under implementation. lands. The World Bank undertook analytical work on the current and projected trends in water sup- While the Maldives is not a major emitter of ply and demand, providing guidance on appropri- greenhouse gases, it is highly impacted by the ate interventions to enhance water security, with effects of climate change attributed to global emphasis on economic efficiency, environmental greenhouse gas emissions. In 2011, total carbon sustainability and equity. emissions in the Maldives were 1.1 million tons Maldives Country Snapshot 9 of carbon dioxide equivalent, contributing a mere able energy technologies and operations in order 0.003 percent of global carbon emissions. Under to make a seamless transition in this respect. The business as usual conditions, greenhouse gas emis- Clean Energy for Climate Mitigation Project under sions could double by 2020, although this would the Maldives Climate Change Trust Fund program still be much lower than other emitters in Asia or demonstrated the techno-economic viability of in- elsewhere.7 On a per capita basis, however, green- tegrating renewable energy technologies into the house gas emissions in the Maldives are the high- power mix in island communities. The project has est in the South Asia region. provided a successful model for future interven- tions in carbon mitigation in the Maldives. The complete reliance on fossil fuels for elec- tricity generation places a significant economic The Maldives is a participating nation in the burden on the national economy. Imports of fos- Scaling-Up Renewable Energy Program (SREP) sil fuels currently cost the Maldives more than 20 for low-income countries. As the only small is- percent of its GDP each year. Furthermore, due to land state that is part of this program that sits the high costs of domestic electricity production under the global Climate Investment Funds, the and distribution -- the highest in the South Asia re- Maldives is able to tap into significant grant and gion -- the country has a long history of subsidized concessional financing to support its renewable energy prices. These universal subsidies represent energy development agenda. These funds are, in a fiscally significant burden, and improving their turn, expected to leverage additional resources, equity and financial sustainability is high on the notably from the private sector, as well as from the government’s agenda. Greater independence from World Bank Group, the Asian Development Bank carbon-based fuels, if achieved through energy ef- (ADB), and other bilateral financiers and donors. ficiency improvements and use of indigenous re- A strong partnership between The World Bank newable energy resources, would provide energy Group and the ADB has facilitated a transforma- security and avoid the costly imports of fossil fuels. tion in the sector and its economics, and developed The Maldives is working towards increasing the innovative financing schemes through the scale-up use of renewables as a means for achieving energy of renewable energy technologies in the country. security and following a low carbon development The government completed a comprehensive in- path for climate change mitigation. Success in this vestment plan, which was approved by the SREP endeavor will serve as an example to other devel- sub-committee. oping nations, and will be of particular interest to As part of the SREP Investment Plan, the gov- small island developing states that come under the ernment requested World Bank support for SIDS DOCK8 umbrella. The chairmanship of this Accelerating Sustainable Private Investments group currently lies with the Maldives. in Renewable Energy (ASPIRE). The ASPIRE pro- The World Bank is supporting the govern- gram, approved in June 2014, has been designed ment’s efforts to move towards a low carbon to leverage International Development Association development path. Emphasis is being placed on (IDA) and SREP funds to attract other donors and shifting away from diesel as the primary fuel for private-sector investments for the development of electricity generation and on acquiring the neces- renewable energy projects. It combines technical sary technical and institutional capacity in renew- assistance, concessional financing and innovative risk-mitigation instruments to provide confidence to private-sector investors in a nascent market. 7   Total carbon emissions in Sri Lanka are 12.3 million tons The project, designed as a partial risk guarantee of CO2 (tCO2); in India 1,600 million tCO2; in Germany 787 mil- supporting standardized project contracts in the lion tCO2; and in the USA 5,800 million tCO2. photovoltaic (PV) sector, has just completed the 8   SIDS DOCK is an initiative among member countries of bidding process for its first sub-project for roof- the Alliance of Small Island States (AOSIS) to provide the SIDS top solar in the Greater Male Region. The govern- with collective institutional mechanisms to transform their na- tional energy sectors for sustainable economic development ment has drawn on support from the World Bank and help SIDS address adaptation to climate change. and SREP to address several key barriers in the 10 renewable energy sector, including the challeng- al other challenges have also emerged, often at a es of a small market size, lack of track record for magnitude not seen elsewhere in South Asia. Non- private investments in this sector, currency and communicable diseases account for 81 percent payment risks, and still evolving regulatory frame- of total deaths in Maldives, the main killers being works. The ASPIRE initiative seeks to move the cardiovascular diseases (39 percent of all deaths), sector towards increasing financial sustainability chronic lower respiratory diseases (7 percent), in a phased manner. Over the program life, ASPIRE cancers (6.9 percent), and diabetes (3.2 percent)12. seeks not only to install between 20-35 megawatts Maldives has a very high prevalence of people who (MW) of solar photovoltaic based generation, but are overweight (53 percent of females and 30 per- also enhance local knowledge and expertise in this cent of males) and of obesity (abdominal obesity area through targeted technical assistance. rates are 25 percent among men and 54 percent among women). With a carrier rate of 18 percent Health of the population, Maldives has the highest preva- lence of thalassemia in the world. Disability is of While sustained investment in the health sec- particular concern in the Maldives: people with se- tor has enabled Maldives to make remarkable vere permanent functional limitations or disabili- progress in its health-related Millennium De- ties have increased since 1980 from approximately velopment Goals (MDGs), new challenges have 1 percent to 4.7 percent of the total population in emerged. Maldives achieved substantial progress 2009.13 in health-related MDGs, well ahead of the 2015 deadline. Infant mortality rates dropped to nine In recent years, Maldives has witnessed major deaths per 1,000 live births in 2011 compared to changes in the way health services are financed. 20 deaths in 1999.9 There is near-universal (99 One of the most significant changes was the intro- percent) immunization coverage, and immuniza- duction of Aasandha, a universal health insurance tion has been consistently above 96 percent since program, on January 1, 2012. The program was 1999. Maternal mortality decreased to 57 deaths expanded in February 2014 as Husnuvaa Aasand- per 100,000 live births in 2008 and further to 31 ha (Unlimited Aasandha). Aasandha benefits are per 100,000 live births in 201310 from 115 deaths comprehensive, covering most inpatient and out- in 1999. Maldives maintains its sustained control patient treatment including drugs and diagnostics. over communicable diseases, keeping the regional Its main challenge, however, is fiscal sustainability. record of malaria-free zone since 1984 and with Analysis of expenditure data from the HIES reveals no cases of such vaccine-preventable diseases as a 42 percent increase in the real health per capita measles, rubella, neonatal tetanus, pertussis and expenditure over the period 2003/04 to 2009/10. diphtheria registered since 2010. HIV prevalence This increase occurred before the introduction of continues to be low, even among the most-at-risk Aasandha and right at the onset of its predecessor, population. Current estimated HIV prevalence is Madhana. The announcement of unlimited health less than 30 per 100,000 population.11 insurance could potentially escalate health costs rapidly, while more cost-effective primary care and While these indicators are impressive when other intervention investments are on the decline. compared to other countries in the region, Measures to contain the total health expenditure they compare less favorably to other nations and to improve financial protection of households with equal levels of income or with the same against health episodes are the twin policy objec- levels of per capita health expenditure. Sever- tives that face Maldives’ policymakers. This also creates a strong case for system-wide reform in the health sector, rather than piecemeal, short-term solutions. The recent history of a runaway rise in 9   Maldives Health Profile, Ministry of Health, 2012. 10  Trends in Maternal Mortality: 1990-2013. Estimates by WHO, UNICEF, UNFPA, the WB and UN Population Division, WHO 2014. 12   WHO Annual Report 2014. 11   WHO and UNAIDS Estimates 2013. 13   MHRC: Disability Report, 2010. Maldives Country Snapshot 11 the country’s total health expenditure -- both gov- reached 106 percent and 110 percent, respectively, ernment and household -- continues to risk fur- net rates are much lower, indicating considerable ther exacerbation by a health insurance program grade repetition or early school entries. Further- that does not make adequate efforts toward cost more, higher secondary gross enrollment is only containment. Focus on adequate financial protec- about 35 percent, which is very low by internation- tion for households, especially in the atolls (where al standards. The average higher secondary gross health expenditure has risen steeply as a share of enrollment rate for middle-income countries is 61 total household spending) needs to be coupled percent, and for upper middle-income countries 84 with innovative purchasing of health services and percent. The main reason for the low enrollment in improving the cost efficiency of the health system. higher secondary education in Maldives has been the limited number of schools offering grades 11- Operational savings in Aasandha could cut its 12. The government has expanded this number to cost significantly, while preserving the prin- 49 schools: four in the capital Male and 45 in the ciple of universal health insurance. The World atolls. Many of these schools, however, are over- Bank has worked closely with the Ministry of Health crowded and require more facilities and equip- and the National Social Protection Agency (NSPA) ment, stronger leadership and management, and to compile and analyze the necessary evidence to teacher development. Higher education participa- inform ongoing reforms to the country’s universal tion is also low for a middle-income country. The health insurance scheme, Aasandha, and its prede- gross higher education enrollment rate is only 6 cessor, Madhana. These savings could be achieved percent. The main reasons for the low enrollment mainly through three channels: (i) by reducing the in higher education are the small flow of students cost of medicines through the bulk procurement of completing higher secondary education and mov- essential and generic drugs; (ii) by reducing expen- ing onto higher education, and the limited provi- diture on overseas treatment through negotiation sion of higher education in the country. There is of close-ended package rates with providers; and one public university, the Maldives National Uni- (iii) through improved attention to early detec- versity, and about seven private education institu- tion and secondary prevention of chronic diseases tions. However, over 95 percent of enrollment in at the primary care level, which will be helpful in these private education institutions is in pre-de- slowing down disease progress and delaying the gree level diploma and certificate programs. occurrence of complications. Substantial capacity building of the NSPA would also be needed to plan, Increasing the quality of service provision to a implement and monitor these reforms. All these standard commensurate with the country’s in- measures, while improving the scheme’s long-run come levels is a challenge. Learning outcomes in fiscal sustainability, will also have positive distri- both primary and secondary education are modest, butional implications. In particular, the decrease in with substantial regional disparities. National as- the cost of drugs would help the poorest segments sessments of learning outcomes at grades four and of the population. The government has requested eight have identified unsatisfactory levels of learn- continued World Bank technical assistance with ing. At grade four, the average score of students in the ongoing reform process, with the objective of the English language is 32 percent and in mathe- improving the efficiency and sustainability of the matics 38 percent. In grade eight, student scores in program and sustained financial protection for English and mathematics average 29 percent and program beneficiaries. 30 percent, respectively. The performance of stu- dents at national examinations has been rising over time, but is still inadequate. Education Increasing the number of well-educated and quali- Maldives has performed well in providing access to fied Maldivians is extremely important for the primary and lower secondary education, but lags country’s continued growth. At present, the coun- sharply behind in education attainment at the up- try depends heavily on expensive overseas labor per secondary level. While the gross primary and for technical, administrative and managerial jobs, lower secondary school enrollment rates have as there are insufficient Maldivians with higher 12 secondary and tertiary level qualifications to take and a $11.6 million grant from the Scaling-up Re- up these positions. Increasing the number of edu- newable Energy Program in Low Income Countries cated and highly skilled Maldivians would boost of the Strategic Climate Fund. A significant body of the domestic labor market and reduce the reliance analytical work and non-lending technical assis- on expensive expatriate labor. The World Bank is tance has underpinned the World Bank program supporting government efforts to expand higher over the past few years, including on human capital secondary education and improve the quality of development, gender, youth, water security, tour- primary and secondary education. Building on ism, the national health insurance scheme, and World Bank analytical work and earlier lending targeting the poor. Trust Funds play an important operations in the education sector, the Enhancing role, particularly in addressing the country’s sus- Education Development project approved in April ceptibility to climate change. In FY17, the Bank is 2013 is focusing on education access and quality, expected to provide support to two new opera- particularly for primary and secondary education. tions, one for sustainable fisheries development, The project covers the entire country, including and another for solid waste management. the outer atolls, in an effort to promote equitable Limited local implementation capacity and a growth and development. distant and dispersed population increase the challenge of delivering timely and quality sup- WORLD BANK GROUP port, especially when the program is small. A PROGRAM IN MALDIVES number of factors affect the implementation and expected outcomes of the WBG’s program of sup- port to the Maldives. Distance increases delivery The new World Bank Group Country Partner- costs and weak implementation capacity often ship Framework (FY 2016-2019) aims to sup- means limited progress between missions, as local port Maldives to achieve more inclusive and implementing agencies may lack expertise and sup- sustainable growth making better use of the port to address the challenges that emerge. These country’s assets – human capital, natural assess, factors become even more constraining when au- and financial resources. The Board of Directors thorities face a serious fiscal crisis or a difficult endorsed the new Country Partnership Framework political environment. Capacity constraints are in May 2016, which focuses on three areas - en- usually reflected in the project designs, and techni- hance employment and economic opportunities of cal assistance to address capacity weaknesses will Maldivians, strengthen natural resource manage- continue to remain important. ment and climate resilience, and improve the ef- ficacy of public financial management and policy INTERNATIONAL FINANCE CORPORATION (IFC) making, Youth, gender, and governance are iden- tified as critical crosscutting development chal- lenges to be addressed by the World Bank Group. These areas taken into account the development Maldives became an IFC member country in 1983. priorities identified in the Systematic Country Di- Since then, IFC has invested $157 million, includ- agnosis (September 2015). The World Bank Group ing $8.5 million mobilized from other institutions. will continue to engage in the Maldives in a selec- IFC’s committed and outstanding investment port- tive and prioritized manner, working with other folio stood at $2 million at the end of June 2016, key development partners to leverage resources. supporting housing finance. IFC’s operations in the Maldives are overseen by its Colombo office in Sri World Bank financing support has tradition- Lanka. ally been limited. At the end of August 2016, the portfolio comprised three IDA projects with a total IFC’s strategy in the Maldives is anchored on the net commitment value of $44.6 million supporting strategic goal of the Country Partnership Frame- education, renewable energy, and public financial work to enable more inclusive and sustainable management. This includes the Renewable Energy growth. Within this framework, IFC focuses on Project ASPIRE, one of the largest and most lever- tourism; financial inclusion; critical infrastructure; aged operations with a $16 million IDA guarantee and climate smart solutions. In addition to housing Maldives Country Snapshot 13 finance, IFC has invested in a number of businesses, including a telecom operator, a leading hotel opera- MULTILATERAL INVESTMENT tor in Maldives and a Maldivian sponsor’s South- South investment in Seychelles. IFC’s advisory GUARANTEE AGENCY (MIGA) projects have included support for the Maldives MIGA supports the World Bank Group strategy Monetary Authority on a credit bureau, and draft- for the Maldives and stands ready to facilitate ing the Non-Banking Financial Institutions Act. productive projects across sectors in the coun- IFC also has completed projects promoting green try. Maldives provides a challenging environment growth, such as advising on resort island energy ef- for foreign investors. However, MIGA remains en- ficiency and on solid waste management for Malé. gaged and is looking to provide support where it can do so on a sustainable basis. 14 MALDIVES: CLIMATE CHANGE ADAPTATION PROJECT (CLIMATE CHANGE TRUST FUND) KEY DATES: Administrative Agreement (between World Bank and European Union signed: December 24, 2014 End Disbursement Date: June 30, 2018 FINANCING IN MILLION US DOLLARS: Financier Contribution (US$ 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