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Maldives: World Bank Launches New Assistance Strategy

Press Release No:2008/185/SAR

Contact
In Washington: Benjamin Crow (202) 473-5105

bcrow@worldbank.org

 

Washington, January 8, 2008—The new World Bank Group Country Assistance Strategy (CAS) for the Republic of Maldives envisages lending around US$45 million in highly concessional funds from the International Development Association (IDA) over the next five years to support the country’s development program. The strategy was prepared jointly by the World Bank and the International Finance Corporation (IFC).

 

The Board of Executive Directors of the Bank discussed today the FY2008-2012 Country Assistance Strategy (CAS), a document that both describes the Bank’s strategic approach to helping Maldives achieve its development goals and indicates the level of financial and technical assistance that will be provided over this time period. The CAS is designed to support the government’s Seventh National Development Plan (7NDP) which aims to improve the standard of living for all Maldivians and which serves as the country’s Poverty Reduction Strategy.

 

The strategy will deploy both lending and advisory services, as well as private sector investments, in selective interventions. These interventions seek to contribute to development outcomes including: (i) a well-managed economy attracting increased investment; (ii) improved quality of education to provide a better skilled workforce; and (iii) enhanced capacity to manage the country’s natural environment.

 

Across these three pillars—economic and fiscal governance, human development and social protection, and environmental management—special attention will be given to developing institutions so as to strengthen fiduciary management and to supporting the government’s plan for population consolidation. Adapting to the possible effects of global climate change, creating opportunities for diversified economic activities, and lowering the cost of public services across the many disparate islands and atolls underlie Maldives’ voluntary population consolidation policy.

 

“Maldives has made impressive development gains over the last three decades and has moved from being one of the 20 poorest countries in the world in 1978 to become a middle-income country which has the highest per capita income in South Asia,” said Alastair McKechnie, World Bank Country Director for Maldives. Maldives has already met all but two of the Millennium Development Goals and has drastically reduced poverty. Past development has been founded on sound fiscal policies, political stability, and highly successful tourist industry, based on the country’s extraordinary natural assets. The new World Bank Group country assistance strategy comes at a time when the country faces new issues—constitutional change, pressures for unsustainable fiscal deficits, and vulnerability to economic shocks and global climate change—that could offset or potentially roll back some of these development gains. We will work closely with the authorities and other donor partners to ensure continued effectiveness of our development work in meeting these challenges.”

 

Maldives faces some significant short-term challenges. The Country Assistance Strategy identifies three in particular: political instability, fiscal uncertainties, and potential issues associated with project implementation. Flexibility is built into the CAS for the Bank to adjust its program accordingly. For new investment projects, project design will be adapted to ensure sustainability even if short-term fiscal problems emerge. Finally, to address potential project implementation risks, projects will be kept simple with tightly focused outputs and outcomes and will include institutional development components where these are needed.

 

The Bank’s interventions to be funded by IDA will focus on results established by previous operations, for example, in the areas of human development and environmental management, as well as some new areas that include environmental management, mobile phone banking, and a new pensions system. Since 2000, IFC has committed $47.8 million in Maldives, consisting of four projects in the finance, tourism, logistics, and telecommunications sectors. Further investment and advisory work during the upcoming CAS will be focused in the areas of infrastructure, access to finance, and tourism.

 




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