Country Operations Business Plan. Maldives July 2017
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1 Country Operations Business Plan July 2017 Maldives This document is being disclosed to the public in accordance with ADB s Public Communications Policy 2011.
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3 CURRENCY EQUIVALENTS (as of 20 June 2017) Currency unit rufiyaa (Rf) Rf1.00 = $ $1.00 = Rf15.40 ABBREVIATIONS ADB Asian Development Bank ADF Asian Development Fund COBP country operations business plan COL concessional ordinary capital resources lending CPS country partnership strategy GDP gross domestic product TA technical assistance NOTE In this report, $ refers to United States dollars. Vice-President W. Zhang, Operations 1 Director General H. Kim, South Asia Department (SARD) Director R. Butiong, Regional Cooperation and Operations Coordination Division, SARD Team leader Team members M. Nakane, Economist, SARD L. George, Energy Specialist, SARD A. Heriawan, Transport Specialist, SARD M.K. Hidalgo, Senior Financial Sector Officer, SARD S. Hong, Knowledge Management Specialist, SARD S. Jagannathan, Senior Education Specialist, Sustainable Development and Climate Change Department R. Jones, Senior Natural Resources and Agriculture Economist, SARD A. Reyes, Associate Programs Officer, SARD R. Slangen, Senior Urban Development Specialist, SARD F. Tornieri, Principal Social Development Specialist (Gender and Development), SARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
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5 CONTENTS Page I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1 II. INDICATIVE RESOURCE PARAMETERS 1 III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 2 APPENDIXES 1. Country Assistance Results Areas 4 2. Indicative Assistance Pipeline 5 3. Assistance Program for Current Year 7 4. Indicative Knowledge Publications and Events 8
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7 I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1. The growth of real gross domestic product (GDP) in Maldives picked up slightly from 2.8% in 2015 to an estimated 3.4% in Construction remained robust, while tourism, which accounts for more than a quarter of GDP, recovered slightly from weak growth in Tourist arrivals remained dismal in 2016, however, particularly from Maldives largest single market, the People s Republic of China. Prospects for economic expansion in the near term will depend on the government sustaining high infrastructure investment and on the expected reinvigoration of tourism. Industries connected with construction and tourism will likewise shape growth, as will presidential elections in GDP growth is projected to improve to 3.8% in 2017 and further to 4.1% in The Government of Maldives has been encouraging the population living in the outer atolls to relocate to the Greater Malé Region 1 to mitigate pressure on the public sector budget. This will help promote efficient public expenditure on economic and social services, increase economies of scale, and mitigate environmental vulnerability. The government is targeting about 70% of the total population to reside in the Greater Malé Region. To prepare for the increase in population in the region, the government has started to implement three mega transport and residential housing projects In April 2016, the government requested the Asian Development Bank (ADB) to shift the focus of its assistance to developing the Greater Malé Region. The government and ADB agreed to carry out analytical work on the development of the region. The results of the study, which is expected to be completed by the end of 2017, will help the government formulate a comprehensive development strategy, which will then serve as the basis for the preparation of ADB s country partnership strategy (CPS) for Maldives. The new CPS will also take into account the new national development plan, which will be prepared following the presidential elections in September The country operations business plan (COBP), for Maldives was prepared based on discussions held between the government and ADB regarding the development of the region. The indicative pipeline of priority projects is based on a preliminary analysis of the government s proposed projects, and detailed consultations with relevant government officials. The country assistance results areas (Appendix 1) are in line with the CPS, This COBP extends the validity of the CPS until a new CPS is in place. II. INDICATIVE RESOURCE PARAMETERS 5. Maldives, a group A developing member country, is eligible for Asian Development Fund (ADF) grants. The indicative ADF grant resource allocation available for commitment for is $37.34 million. 4 The final allocation will depend on available resources and the outcome of the country performance assessments. The 2016 debt distress classification of Maldives was assessed to be at high risk of debt distress. In accordance with the ADF grants framework, the country is to receive 100% of its country allocation in grants in 2017, subject to a 20% volume 1 The Greater Malé Region includes Fonadhoo, Gulhifalhu, Hulhulé, Hulhumalé, Malé, Thilafushi, and Villingili. 2 The three projects are the Velana International Airport Expansion Project, the Malé Hulhumalé Bridge Project, and the Hulhumalé Phase 2 development with 15,000 housing units. 3 ADB Country Partnership Strategy: Maldives, Manila. 4 Maldives is classified a 100% grant recipient country, so it is not eligible for concessional ordinary capital resources lending. The indicative resources available for commitment for include allocation of resources for disaster risk reduction.
8 2 discount on the grant portion of the country allocation. 5 Cofinancing and funding from other sources, including the regional pool under concessional resources, and opportunities for the country to access regular ordinary capital resources for projects which could generate foreign exchange revenues that could meet more than their foreign debt-service requirement, will be explored. 6. The lending and nonlending programs during (Appendix 2) will support the development outcomes in water and other urban infrastructure and services, trade and industry, and public sector management, which are all in line with the priority areas of the previous CPS. The lending program will total $52.27 million, of which $49.77 million will be from ADF grant resource allocation for , and the balance will be sourced from the regional pool allocation. The nonlending program during the period amounts to $2.30 million. The assistance program for both lending and nonlending products for the current year is in Appendix 3. Appendix 4 provides the list of indicative knowledge publications and events for 2017 and 2018, which seek to respond to the country s priority knowledge needs. III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 7. Lending program. The Greater Malé Connectivity Improvement Project (programmed for 2019 with preparatory work scheduled for 2017) was dropped since the project s economic viability has not been confirmed. The Greater Malé Environmental Improvement and Waste Management Project remains in the new COBP with the following changes: (i) increase in ADF grant allocation from $25.29 million to $49.77 million; (ii) shift from a single project to phased implementation: Phase 1 scheduled for 2018 for $24.85 million, and Phase 2 scheduled for 2019 for $24.92 million contingent on the availability of suitable land to be secured and funded by the government for the project; and (iii) sector reclassification from energy to water and other urban infrastructure and services following the shift in project focus from energy supply to waste management. 8. A new area of intervention is the South Asia Subregional Economic Cooperation National Single Window Project, which is programmed as a standby project for 2018 and as a firm project for The project, which will be ADB s first regional cooperation and integration project in Maldives, will help promote trade facilitation and is in line with the government s objective of improving the business environment. 9. Nonlending program. The transaction technical assistance (TA) 6 to accompany the Greater Malé Connectivity Improvement Project was dropped from the 2019 program. Two nonlending programs scheduled for 2018 in the previous COBP will be retained: (i) transaction TA for $2 million 7 to help the government develop capacity to implement the Greater Malé Environmental Improvement and Waste Management Project; and (ii) knowledge and support TA for $300,000 for Capacity Building for Portfolio Management. 5 The proportion of grants for the resource allocations during will be determined by future annual debt distress classifications in accordance with the ADF grants framework. 6 The TA was formerly referred to as capacity development technical assistance under the old classification system. 7 Of the TA s total amount of $2 million, $1 million will come from the Technical Assistance Special Fund and $1 million from other sources, which are yet to be determined.
9 10. Nonsovereign operations. The pursuit of private sector investments and nonsovereign operations faces ongoing constraints in Maldives, such as the lack of effective convertibility of the rufiyaa, the generally weak capacity of the private sector in key areas (financial management and accounting), and the lack of a skilled workforce. ADB will continue to explore potential private sector operations to support capacity building and promote the expansion of tourism and emerging export industries. 3
10 Key Country Development Outcomes that ADB Contributes to Key Areas of Assistance 1. Water and Other Urban Infrastructure and Services COUNTRY ASSISTANCE RESULTS AREAS ADB Indicative Resource Allocation in Changes from Last COBP 4 Appendix 1 Improved access to sustainable solid waste management services benefiting the poor and women Improved quality and reliability of electricity supply Improved institutional capacity for policy formulation, sector regulation, and project implementation Improved waste management facilities Enhanced energy efficiency, transmission, and distribution Capacity building for the relevant agencies Grants: Amount: $49.77 million (ADF) Share of COBP envelope: 95% TA: Amount: $1 million (TASF) and $1 million (cofinancing, source to be determined) ADF grant allocation increased from $25.29 million to $49.77 million. From a single project, phased implementation will be adopted, subject to availability of suitable land to be secured and funded by the government for the project. Sector classification changed from energy to water and other urban infrastructure and services. 2. Industry and Trade Improvements in ease of doing business Efficient, effective, transparent, secure, and service-oriented processing of crossborder trade in South Asia Developed and expanded private small and medium-sized enterprises subsector Modern and effective customs administration Streamlined and transparent business regulations and procedures Improved merchandise trade of the private sector, including small and mediumsized enterprises Grants: Amount: $2.5 million (ADF) and $2.5 million (cofinancing, source to be determined) Share of COBP envelope: 5% South Asia Subregional Economic Cooperation (SASEC) National Single Window Project was added in 2018 (standby) and 2019 (firm) as a new area of intervention based on the government s request to participate in SASEC trade facilitation agenda. ADB = Asian Development Bank, ADF = Asian Development Fund, COBP = country operations business plan, TA = technical assistance, TASF = Technical Assistance Special Fund. Note: The transport sector was dropped and replaced with industry and trade as a new area of intervention. Source: ADB estimates.
11 . Appendix 2 5 INDICATIVE ASSISTANCE PIPELINE Table A2.1: Lending Products, Strategic Agendas and Drivers of Change Year of TRTA/ PDA Cost ($ million) ADB Project/Program Name Sector Poverty Targeting Division Total Regular OCR COL ADF Grants Total Gov t Cofinance 2018 Firm Greater Malé Environmental WUS TI-G IEG, PAR, SAUW 2017 TBD TBD TBD Improvement and Waste and GEM Management Project (Phase1) Total TBD TBD TBD 2018 Standby SASEC National Single IND TI-G RCI and SARC Window Project GEM Total Firm Greater Malé Environmental Improvement and Waste Management Project (Phase 2) WUS TI-G IEG, PAR, and GEM SAUW 2017 TBD TBD TBD SASEC National Single IND TI-G RCI and SARC Window Project GEM Total TBD TBD TBD ADB = Asian Development Bank; ADF = Asian Development Fund; COL = concessional OCR lending; GEM = gender equity and mainstreaming; gov t = government; IEG = inclusive economic growth; IND = industry and trade; OCR = ordinary capital resources; PAR = partnerships; PDA = project design advance; RCI = regional cooperation and integration; SARC = Regional Cooperation and Operations Coordination Division, South Asia Department; SASEC = South Asia Subregional Economic Cooperation; SAUW = Urban Development and Water Division, South Asia Department; TBD = to be determined; TI-G = targeted intervention geographic dimensions of inclusive growth; TRTA = transaction technical assistance; WUS = water and other urban infrastructure and services. Source: Asian Development Bank.
12 Table A2.2: Nonlending Products and Services, Sources of Funding ADB Others Assistance Name Sector Division Assistance Type Source Amount ($'000) Source Amount ($'000) Total ($'000) 2018 Greater Malé Environmental Improvement and Waste Management Project WUS SAUW TRTA TASF 1, TBD 1, , Appendix 2 Capacity Building for Portfolio Management PSM SARC KSTA TASF Total 1, , , ADB = Asian Development Bank; KSTA = knowledge and support technical assistance; PSM = public sector management; SARC = Regional Cooperation and Operations Coordination Division, South Asia Department; SAUW = Urban Development and Water Division, South Asia Department; TASF = Technical Assistance Special Fund; TBD = to be determined; TRTA = transaction technical assistance; WUS = water and other urban infrastructure and services. Source: Asian Development Bank.
13 ASSISTANCE PROGRAM FOR CURRENT YEAR Table A3.1: Lending Products, 2017 Poverty Strategic Agendas and Drivers Year of TRTA/ Regular Cost ($ million) ADB ADF Cofinance Project/Program Name Sector Targeting of Change Division PDA Total OCR Loans Grants Total Gov t None Total ADB = Asian Development Bank, ADF = Asian Development Fund, gov t = government, OCR = ordinary capital resources, PDA = project design advance, TRTA = transaction technical assistance. Note: Investment lending accounted for 100% of sovereign lending commitments during Source: Asian Development Bank. Table A3.2: Nonlending Products and Services, 2017 Assistance Name Sector Division Assistance Type ADB Amount Source ($'000) Sources of Funding Others Source Amount ($'000) Total ($'000) Greater Malé Environmental Improvement and WUS SAUW TRTA TASF Waste Management Project Total ADB = Asian Development Bank; SAUW = Urban Development and Water Division, South Asia Department; TASF = Technical Assistance Special Fund; TRTA = transaction technical assistance; WUS = water and other urban infrastructure services. Source: Asian Development Bank. Appendix 3 7
14 INDICATIVE KNOWLEDGE PUBLICATIONS AND EVENTS Table A4.1: Knowledge Publications and Events for 2018 Title of Publication or Event Subject Type Publications Asian Development Bank and Maldives: ADB administration and Fact Sheet 2017 governance Department or Sector Group or Thematic Group DER Technical Assistance 8 Appendix 4 Asian Development Outlook 2018, economics, governance and public sector management ERCD Key Indicators for Asia and the Pacific 2018, economics, governance and public sector management ERCD Asian Economic Integration Report 2018, economics, governance and public sector management, industry and trade, regional cooperation and integration : flagship study ERCD The Economic Effects of Participating in Global Value Chains: Country and Sector Level Analysis, economics, governance and public sector management ERCD TA 8779 Road Safety Campaign in Malé Transport SARD (SATC) ADB s Contribution to Urban Development in South Asia: Two-Decade Journey Water, urban development : flagship study SARD South South Learning Knowledge management : technical study SARD TA 7997
15 Title of Publication or Event Subject Type Urban Health in South Asia Health, urban development Events Department or Sector Group or Thematic Group SDCC (Health Sector Group) Technical Assistance Sector group, thematic group budget, administrative Asia Clean Energy Forum 2018 Energy, environment, finance, regional cooperation and integration Flagship event SDCC (Energy Sector Group) TA 8953 Asia Solar Energy Forum 12th Meeting, climate change, energy, environment, finance Flagship event SDCC (Energy Sector Group) TA 8953 Total number of publications = 9 Total number of events = 2 ADB = Asian Development Bank; DER = Department of External Relations; ERCD = Economic Research and Regional Cooperation Department; SARD = South Asia Department; SATC = Transport and Communications Division, SARD; SDCC = Sustainable Development and Climate Change Department; TA = technical assistance, TBD = to be determined. Source: Asian Development Bank. Appendix 4 9
16 Table A4.2: Additional Knowledge Publications and Events Delivered in 2017 Title of Publication or Event Subject Type Publications Asian Development Bank and Maldives: ADB administration and Fact Sheet 2016 governance Department or Sector Group or Thematic Group DER, SARD Technical Assistance 10 Appendix 4 ADB Economics Working Paper Series No. 507: Impacts of Sea Level Rise on Economic Growth in Developing Asia Climate change ERCD Asian Development Outlook 2017: Transcending the Middle-Income Challenge, economics, governance and public sector management ERCD Compendium of SUTs for Asia: Benchmark Supply and Use Tables for Selected Economies in Asia and the Pacific Economics, capacity development, governance and public sector management ERCD TA 8838 Key Indicators for Asia and the Pacific 2017 Asian Economic Integration Report 2017 Second knowledge product on priority legal and regulatory issues in South Asia, economics, governance and public sector management, economics, governance and public sector management, industry and trade, regional cooperation and integration Governance and public sector management, regional cooperation and integration, capacity development : flagship study : flagship study : technical study Assessment of Power Sector Reforms in South Asia Energy ERCD ERCD OGC TA 8801 SARD, SDCC TA 7997 Cross-border Power Generation, Transmission and Trading A Way Forward for South Asia Energy Documentation SARD TA 7997 Country Readiness Assessment Framework for South Asia Economic Corridor Development Economics SARD TA 8254
17 Title of Publication or Event Subject Type Next Steps to South Asian Economic Union Regional cooperation and integration Road Map for National Single Window in Maldives Trade facilitation, transport Risk Management in Maldives: Action Plan and Recommendations Fast-Track Reform: Lessons from Maldives Innovative Strategies for Accelerated Human Resource Development in South Asia: Teacher Professional Development Customs valuation, risk management, trade facilitation Taxation, tax reform, finance, economics Education, human resource development : technical study Department or Sector Group or Technical Thematic Group Assistance SARD TA 7997 SARD (SARC) TA 7997 SARD (SARC) TA 7997 SARD (SAPF) TA 7997 SARD (SAHS) TA 7997 South Asia Subregional Economic Cooperation: Powering Asia in the 21st Century Regional cooperation and integration : technical study SARD TA 7997 SASEC 15-Year Anniversary Coffee Table Book Regional cooperation and integration : technical study SARD TA 7997 Development of Hybrid Renewable Energy in Minigrids Energy : technical study SARD TA 8435 ADB UN Women Benchmark Publication on Gender Equality and the SDGs in Asia and the Pacific Gender SDCC TA 8797 Events Regional Technical Evaluation and Training Workshop on International Comparison Program event for DMCs ERCD TA nd Conference on the Development of Supply and Use Tables (SUT) in Asia and the Pacific event for DMCs ERCD TA 8838 Writeshop: Compendium of SUTs in Asia and the Pacific event for DMCs ERCD TA 8838 Appendix 4 11
18 Title of Publication or Event Subject Type Inception Meeting for National Implementing Agencies event for DMCs Department or Sector Group or Technical Thematic Group Assistance ERCD TA Appendix 4 Training on Time Series/Annual SUT Updating/Estimation event for DMCs ERCD TA 8838 Regional Technical Evaluation and Training Workshop on ICP event for DMCs ERCD TA 7507 SASEC Finance Ministers Meeting SASEC Trade Facilitation and Transport Working Group Meeting Maldives: National Consultation on Sanitary/Phytosanitary and Technical Barriers to Trade Diagnostic Study Regional cooperation and integration Regional cooperation and integration, transport Regional cooperation and integration Event organization SARD TA 9231 Event organization SARD TA 7491 Event organization SARD TA 6512 Total number of publications = 19 Total number of events = 9 ADB = Asian Development Bank; DER = Department of External Relations; DMC = developing member country; ERCD = Economic Research and Regional Cooperation Department; ICP = International Comparison Program; OGC = Office of the General Counsel; SAHS = Human and Social Development Division, SARD; SAPF = Public Management, Financial Sector, and Trade Division, SARD; SARC = Regional Cooperation and Operations Coordination, SARD; SARD = South Asia Department; SASEC = South Asia Subregional Economic Cooperation; SDCC = Sustainable Development and Climate Change Department; SDG = Sustainable Development Goal; SUT = supply and use table; TA = technical assistance; UN Women = United Nations Entity for Gender Equality and the Empowerment of Women. Source: Asian Development Bank.
19 Table A4.3: Innovation, Advanced Technology, and Pilot Initiatives to be Implemented in 2018 Item Use of high-level technology through waste-to-energy Total number of innovation, advanced technology, and pilot initiatives = 1 SAUW = Urban Development and Water Division, South Asia Department. Source: Asian Development Bank. Nature Advanced technology Project Number Sector or Theme Division Environment SAUW Appendix 4 13
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