Country Operations Business Plan: Maldives,

Transcription

1 IN August 2016 Country Operations Business Plan: Maldives, Attached for information is a paper on the above subject. For Inquiries: M. Nakane, South Asia Department (Ext. 5346)

2 Country Operations Business Plan August 2016 Maldives This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

3 CURRENCY EQUIVALENTS (as of 20 July 2016) Currency unit rufiyaa (Rf) Rf1.00 = $ $1.00 = Rf ABBREVIATIONS ADB ADF Asian Development Bank Asian Development Fund COBP country operations business plan CPS country partnership strategy DRR disaster risk reduction TA technical assistance NOTE In this report, $ refers to US 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 M. Fan, Senior Urban Development Specialist, SARD L. George, Energy Specialist, SARD A. Heriawan, Transport Specialist, SARD M. K. Hidalgo, 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 S. Shafiq, Financial Management 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.

4 CONTENTS I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1 II. INDICATIVE RESOURCE PARAMETERS 2 III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 2 Page 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

5 I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1. A drop in the tourism and communication sectors slowed down real gross domestic product (GDP) growth in the Maldives to 1.5% in 2015 from 6.5% in Tourism, which in the last 10 years has come to account for the largest share, around 30% of GDP, declined in 2015 amid weak economic conditions in major markets particularly the People s Republic of China, which accounts for around 30% of the total tourist arrivals and increasing competition from closer Asian destinations. GDP growth was supported by increased public investments, which fueled robust construction activities. Construction expanded by about 40%, and real estate by nearly 4%. Growth is expected to recover to 3.5% in 2016 on robust public investments. The government s highly expansionary program to invest in public infrastructure will raise capital spending and construction in 2016 and Tourism is likely to be restrained by economic constraints in the major tourist markets. 2. The Government of the Maldives has been encouraging the population living in the outer atolls to relocate to the Greater Male Region to mitigate the pressure on the public sector budget in order to promote more efficient public expenditure on economic and social services. 1 The government is targeting about 70% of the total population to reside in the Greater Male 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 Male Region including (i) the construction of bridges to connect Male, Villingili, Gulhi Falhu, and Thilafushi; and (ii) urban development for Phase 2 of Hulhumale Youth City 3. As a result, ADB and the government need to revisit the strategic priorities of the draft country partnership strategy (CPS), The draft CPS, as initially agreed between ADB and the government, will primarily target the outer atolls and focus on (i) enhancing infrastructure connectivity to expand the access of communities to public services and markets; (ii) diversifying the economic base by supporting the development of micro, small, and medium-sized enterprises and their access to credit and skills development through an enabling environment; and (iii) improving environmental management by addressing climate change concerns To identify the relevant strategic and operational priorities, and the pipeline of projects aligned with the government s new focus for ADB assistance, ADB needs to carry out detailed analytical work, including a feasibility study for the comprehensive development of the Greater Male Region, and hold further consultations with the government. The feasibility study will help the government prepare a comprehensive development strategy for the region and identify potential ADB projects. Consideration of the new CPS by ADB s Board of Directors will be deferred from 2016 to 2017 to include the findings of the analytical work. Until the new CPS is prepared, the country operations business plan (COBP), includes an indicative pipeline of priority projects supporting the development of the Greater Male Region based on a 1 The Greater Male Region includes Gulhi Falhu, Hulhumale, Male, Thilafushi, and Villingili islands. 2 The three projects are the Ibrahim Nasir International Airport Expansion Project, the Male Hulhumale Bridge Project and the Hulhumale Phase 2 development including 15,000 housing units. 3 The government established state-owned company, Housing Development Corporation Ltd. (HDC), with the mandate of undertaking the Hulhumalé development project, called Youth City, to provide opportunities and infrastructure to the creative entrepreneurship of the youth of the nation. HDC invests in infrastructure, including the development of roads, landscaping, and basic utilities. 4 The proposed CPS was to be based on the Manifesto and other relevant government strategy documents: (i) Maritime Transport Master Plan, (ii) Small and Medium Enterprises Act, and (iii) Climate Change Policy Framework. It was also to be prepared in line with the results of the country diagnostic study (completed in 2015), the CPS and the interim CPS final review report (completed in 2014) and its validation (completed in 2015).

6 2 preliminary analysis of the government s proposed projects, and detailed consultations with relevant officials. 5. The country assistance results areas of the COBP, (Appendix 1) have been adjusted to reflect the expected changes in the indicative lending and nonlending products and services during (Appendix 2, Table A2.1 and Table A2.2). Appendix 3 summarizes the lending and nonlending programs for The COBP will support development outcomes in energy, transportation, and public sector management, which are all in line with the priority areas of the previous CPS, Appendix 4 provides the indicative knowledge products that will be delivered in the Maldives in 2016 and 2017 to respond to the country s priority knowledge needs. II. INDICATIVE RESOURCE PARAMETERS 6. As a Group A developing member country, the Maldives is eligible for Asian Development Fund (ADF) grants. 5 The indicative ADF grant and concessional ordinary capital resources lending allocation for is $60.63 million, including $15.83 million in disaster risk reduction (DRR) resources. 6 The final allocation will depend on available resources and the outcome of the country performance assessments. Cofinancing and funding from other sources, including the regional pool under concessional resources, will be explored. While ADB assesses indebtedness risk annually for allocation purposes the following year, the 2016 debt distress classification of Maldives which was assessed to be high, was based on the 2016 Article IV consultation of IMF with Maldives. 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 discount on the grant portion of the country allocation. 7 III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 7. Lending program. The L. Gan-Fonadhoo Community Connectivity Project, proposed as a firm project in 2018 in the previous COBP, was dropped following the request of the government. 8 Instead, two new programs to support the government s new connectivity and economic infrastructure projects in Greater Male Region will be added: (i) the Greater Male Connectivity Improvement Project programmed for 2019 with preparatory project to commence in 2017; and (ii) the Greater Male Environmental Improvement and Waste Management Project, which is programmed as a standby project for 2017 and as a firm project for Nonlending program. Five nonlending programs will be added: (i) the project preparatory technical assistance (TA) for $600,000 for the proposed Greater Male Environmental Improvement and Waste Management Project in 2017; (ii) supplementary 5 This refers to the combination of ADF lending operations with the ordinary capital resources balance sheet that will take effect on 1 January For 2016, the concessional ordinary capital resources lending should be understood as ADF lending. 6 The DRR aims to strengthen disaster resilience and help spur investment. This additional financing will support (i) stand-alone DRR projects, (ii) discrete DRR components of other grant and loan projects, and (iii) the incremental cost in strengthening the disaster resilience of infrastructure investments. 7 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. 8 ADB initially programmed an ensuing loan of $15.67 million for 2018, which will improve access of communities in the Laamu Atoll located in the South Central Region to road transport through the upgrading and construction of district roads to connect urban and rural communities to the main link road, thereby, contributing to improved productivity and welfare in the outer atolls. In April 2016, the Government of the Maldives requested the cancellation of the project preparatory TA for the L. Gan-Fonadhoo Community Connectivity project, which was approved in 2015.

7 3 financing for $400,000 for the capacity development TA for Strengthening Capacity for Operations Management in 2017; (iii) the capacity development TA for $2.0 million to accompany the Greater Male Environmental Improvement and Waste Management Project in 2018; (iv) the capacity development TA for $300,000 for Capacity Building for Portfolio Management in 2018; and (v) the capacity development TA for $1.0 million to accompany the Greater Male Connectivity Improvement Project in The capacity development TA that was proposed to accompany the L. Gan-Fonadhoo Community Connectivity Project was removed from the 2018 program. 9. Nonsovereign operations. There are ongoing constraints in actively pursuing private sector investments and nonsovereign operations in the Maldives, such as the lack of effective convertibility of the rufiyaa, the generally weak capacity of the private sector in key areas such as 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 emerging export industries.

8 4 Appendix 1 COUNTRY ASSISTANCE RESULTS AREAS Key Country Development Outcomes that ADB Contributes to 1. Energy Key Areas of Assistance ADB Indicative Resource Allocation in Changes from Last COBP Improved quality and reliability of electricity supply Improved institutional capacity for policy formulation, sector regulation, and project implementation 2. Transport Enhanced energy efficiency, transmission and distribution Capacity building for the relevant agencies Lending and Grants: Amount: $25.29 million (ADF) and $50.00 million (cofinancing) Share of COBP envelope: 40% TA: Amount: $600,000 (TASF) and $2,000,000 (cofinancing) Greater Male Environmental Improvement and Waste Management Project added in 2018 with PPTA in 2017 and CDTA in Improvements in the transport network Well-structured, organized, and capable central transport sector in which government institutions operate as facilitators, and in which public assets are managed and maintained in a more effective and sustainable manner Bridges, road safety, and asset management Lending and Grants: Amount: $37.39 million Share of COBP envelope: 60% TA: Amount: $1,000,000 (TASF) PPTA and the ensuing loan for the L. Gan-Fonadhoo Community Connectivity Project was dropped following shifts in government requests. Greater Male Connectivity Improvement Project added in 2019 with TA grant in 2017 and CDTA in Public Sector Management Improved project management capabilities in core ministries established Stronger portfolio management capacity TA: Amount: $700,000 (TASF) To enhance government capacity, the following TAs were added: (i) Supplementary financing for TA8070: Strengthening Capacity for Operations Management in 2017 (ii) Capacity Building for Portfolio Management in 2018 ADB = Asian Development Bank; ADF = Asian Development Fund; CDTA = capacity building technical assistance; COBP = country operations business plan; PPTA = project preparatory technical assistance; TA = technical assistance; TASF = Technical Assistance Special Fund. Source: Asian Development Bank estimates.

9 Appendix 2 5 INDICATIVE ASSISTANCE PIPELINE Table A2.1: Lending Products, Project/Program Name Sector Poverty Targeting Strategic Agendas and Drivers of Change Division Year of PPTA/ PDA Total OCR Cost ($ million) ADB ADF COL Grants Total Gov t Cofinance 2017 Firm Greater Male Connectivity Improvement Project (TA Grant) TRA TI-G IEG and RCI SATC TBD 0.00 Total TBD Standby Greater Male Environmental Improvement and Waste Management Project ENE TI-G IEG and PAR SAEN TBD a Total TBD Greater Male Environmental Improvement and Waste Management Project ENE TI-G IEG and PAR SAEN TBD Total TBD Greater Male Connectivity Improvement Project TRA TI-G IEG and RCI SATC TBD TBD Total TBD TBD ADB = Asian Development Bank; ADF = Asian Development Fund; COL = concessional OCR lending; ENE = energy; Gov t = government; IEG = inclusive economic growth; OCR = ordinary capital resources; PAR = partnerships; PDA = project design advance; PPTA = project preparatory technical assistance; RCI = regional cooperation ; SAEN = Energy Division, South Asia Department; SATC = Transport and Communications Division; South Asia Department; TBD = to be determined; TI-G = targeted intervention geographic dimensions of inclusive growth; TRA = transport. a Cofinancing amount is indicative, and source to be determined. Source: Asian Development Bank.

10 6 Appendix 2 Table A2.2: Nonlending Products and Services, Assistance Name Sector Division Assistance Type ADB Amount Source ($'000) Sources of Funding Others Source Amount ($'000) Total ($'000) 2017 Greater Male Environmental Improvement and Waste Management Project Strengthening Capacity for Operations Management (Supplementary financing) ENE SAEN PPTA TASF TBD PSM SARC CDTA TASF Total 1, , Greater Male Environmental Improvement and Waste Management Project ENE SAEN CDTA 0.00 TBD 2, , Capacity Building for Portfolio Management PSM SARC CDTA TASF Total , , Greater Male Connectivity Improvement Project TRA SATC CDTA TASF 1, , Total 1, , ADB = Asian Development Bank; CDTA = capacity development technical assistance; ENE = energy; PPTA = project preparatory technical assistance; PSM = public sector management; SAEN = Energy Division, South Asia Department; SARC = Regional Cooperation and Operations Coordination Division, South Asia Department; SATC = Transport and Communications Division, South Asia Department; TASF = Technical Assistance Special Fund; TBD = to be determined; TRA = transport. Source: Asian Development Bank.

11 Appendix 3 7 ASSISTANCE PROGRAM FOR CURRENT YEAR Table A3.1: Lending Products, 2016 Project/Program Name Sector Poverty Targeting Strategic Agendas and Drivers of Change Division Year of PPTA/ PDA Total OCR Cost ($ million) ADB ADF Loans Grants Total Gov t Cofinance Kulhudhuffushi Harbor Expansion Project TRA TI-G IEG, ESG, PSD SATC Total ADB = Asian Development Bank; ADF = Asian Development Fund; ESG = environmentally sustainable growth; Gov t = government; IEG = inclusive economic growth; OCR = ordinary capital resources; PDA = project design advance; PPTA = project preparatory technical assistance; PSD = private sector development; SATC = Transport and Communications Division, South Asia Department; TI-G = targeted intervention geographic dimensions of inclusive growth; TRA = transport. Source: Asian Development Bank. Table A3.2: Nonlending Products and Services, 2016 Assistance Name Sector Division Assistance Type ADB Amount Source ($'000) Sources of Funding Others Source Amount ($'000) Total ($'000) Capacity Development for Kulhudhuffushi Harbor Extension Project TRA SATC CDTA TASF Total ADB = Asian Development Bank; CDTA = capacity development technical assistance; SATC = Transport and Communications Division; South Asia Department; TASF = Technical Assistance Special Fund; TRA = transport. Source: Asian Development Bank.

12 8 Appendix 4 INDICATIVE KNOWLEDGE PUBLICATIONS AND EVENTS Table A4.1: Knowledge Publications and Events for 2017 Title of Publication or Event Subject a Type b The Economic Effects of Participating in Global Value Capacity development, Chains: Country and Sector Level Analysis Economics, and Governance and public SASEC 2025: Vision Document (third quarter of 2017) sector management Department or Sector Group or Technical Thematic Group c Assistance ERCD RETA 8779 SARD RETA 7491 Transport and Trade Facilitation Monitoring Mechanism Asia SME Finance Monitor Industry and trade, and Finance, and Industry and trade SARD RETA 7491 SDCC TA; Admin Core Budget (Staff work) Trainings for policymakers, insurance supervisors, and other insurance stakeholders materials Finance SDCC RETA 8528 Working Papers (six) produced under the Sustainable Hydropower in Asia Environment SDCC (Environment) To be determined Progress Report ( ) on the MDB Working Group on Sustainable Transport Update Country Social Protection Indicator Transport, Climate change, and Environment Social development and protection SDCC (Transport) SDCC (Gender Equity and Social Development) SG and TG Budget RETA 8677

13 Appendix 4 9 Title of Publication or Event Subject Type Events Launch and Dissemination of the Asian Economic Integration Report 2017 Subregional Conference on Inclusive Access to Transport (or Urban Development) Launch Seminar of Asia SME Finance Monitor Trainings for policymakers, insurance supervisors, and other insurance stakeholders Asia Clean Energy Forum 2017 Asia Solar Energy Forum 11th Meeting Capacity development, Economics, Finance, Industry and trade, and Transport Finance, and Industry and Trade Finance Energy, Environment, Finance, and Regional cooperation and integration Climate change, Energy, Environment, Finance, and Capacity development Department or Sector Group or Thematic Group Technical Assistance Event organization ERCD TA; Admin Core Budget (Staff work) Training or capacity development SARD and SDCC RETA 8311 Event organization SDCC (Finance) TA; Admin Core Budget (Staff) Training or capacity SDCC (Finance) RETA 8254 development Event organization SDCC (Energy) TA; Trust Fund Initiative; Partner Event organization SDCC (Energy) To be determined Total number of publications = 8 Total number of events = 6 ERCD = Economic Research and Regional Cooperation Department; MDB = multilateral development bank; RETA = regional technical assistance; SARD = South Asia Department; SASEC = South Asia Subregional Economic Cooperation; SDCC = Sustainable Development and Climate Change Department; SG = sector group; SME = small and medium-sized enterprise; TA = technical assistance; TG = thematic group. Source: K-Nexus.

14 10 Appendix 4 Table A4.2: Additional Knowledge Publications and Events Delivered in 2016 Title of Publication or Event Subject Type Integrating South and East Asia: An Analysis of the Economic Effects of Intensified Regional Cooperation and Integration The Future of Regional Cooperation in Asia and the Pacific Economics, Regional cooperation and integration Economics, Regional cooperation and integration Assessment of Power Sector Reforms in South Asia Energy Cross-border Electricity Generation, Transmission and Energy Trading: A Vision for South Asia Fast-Track Tax Reform The Maldives Story Finance SASEC 2025: Operational Plan Risk Management in the Maldives: Action Plan and Recommendations Male Road Safety Program Transport Roadmap for the National Single Window in the Maldives Conference Report of the Sub-regional Gender, Energy Conference on Going Beyond the Meter Inclusive Energy Solutions in South Asia Hybrid Renewable Energy Systems Development in South Asia DMCs Energy Training materials for policymakers, insurance supervisors, and other insurance stakeholders Finance 2015 Joint MDB Climate Finance Report Climate change Progress Report ( ) of the MDB Working Group on Sustainable Transport Promoting Investment in Natural Capital: Science, Policy, and the Way Forward Transport and Climate Change Environment Department or Sector Group or Thematic Group ERCD ERCD SARD SARD Technical Assistance RETA 7791; Admin Core Budget (Staff work) RETA 9032; Admin Core Budget (Staff work) To be determined To be determined SARD RETA 7997 SARD RETA 7997 SARD TA 8436 SARD Admin Core Budget (Staff work) SARD TA 8436 SARD and SDCC (Gender Equity) RETA 8311 SARD TA 7485 SDCC (Finance) RETA 8528 SDCC (Climate Change and Disaster Risk Management) SDCC (Transport) SDCC (Environment) Admin Core Budget (Staff) To be determined SG and TG Budget

15 Appendix 4 11 Title of Publication or Event Subject Type Department or Sector Group or Thematic Group Technical Assistance Events Launch and Dissemination of the Asian Economic Integration Report 2016 Trade and Transport Facilitation Monitoring Mechanism: Baseline Study Meeting SASEC 2025 Finalization Workshop 4th SASEC Electricity Transmission Utility Forum Economics, Finance, Capacity development, Industry and trade, and Energy, and Regional cooperation and integration 5 th SASEC Customs Subgroup Meeting SASEC ASYCUDA Subregional Network Meeting Capacity development, and Regional cooperation and development 6th SASEC Customs Subgroup Meeting SASEC Customs-to-Customs Data Exchange Workshop SASEC Transport and Trade Facilitation Working Group Meeting Regional Workshop on Technical and Regulatory Challenges in Cross-Border Electricity Transmission Interconnections Industry and trade, and, and Transport Industry and trade, and, and Energy Event organization ERCD TA; Admin Core Budget (Staff work) The Maldives: Second National Workshop on Customs Valuation Deployment of Advanced Energy Storage to increase the share of renewable energy in Addu Island of Maldives Subregional Conference on Going Beyond the Meter: Inclusive Energy Solutions in South Asia Energy Other SARD (SAEN) To be determined Energy, and Gender Event organization SARD / SDCC (Gender Equity) RETA 8311

16 12 Appendix 4 Title of Publication or Event Subject Type Deep-dive Lateral Learning Program on Inclusive Energy Solutions Trainings for policymakers, insurance supervisors, and other insurance stakeholders Department or Sector Group or Thematic Group Energy Training SARD RETA 8311 Technical Assistance Finance Training or capacity development SDCC (Finance) RETA 8528 / Admin Core Budget (Staff work) 6th International Skills Forum 2016 Education Event organization SDCC (Education) To be determined 2016 OGP Asia-Pacific Regional Dialogue Governance and public sector management Asia Clean Energy Forum 2016 Capacity development, Climate change, Energy, Environment, Finance, Gender, Transport, Urban Development, Water, and Regional cooperation and integration Event organization SDCC TA (to be determined) Event organization SDCC (Energy) TA; Trust Fund; Initiative; Partner Total number of publications = 15 Total number of events = 18 ASYCUDA = Automated System for Customs Data; DMC = developing member country; ERCD = Economic Research and Regional Cooperation Department; MDB = multilateral development bank; OGP = open government partnership; RETA = regional technical assistance; SAEN = Energy Division; SARD = South Asia Department; SASEC = South Asia Subregional Economic Cooperation; SDCC = Sustainable Development and Climate Change Department; SG = sector group; TA = technical assistance; TG = thematic group. Notes: Since the country operations business plan, includes information on operations for 2016 (as programs for the current year), this table incorporates knowledge publications and events delivered, or to be delivered, in Source: K-Nexus.

17 Appendix 4 13 Table A4.3: Innovation, Advanced Technology, and Pilot Initiatives to be Implemented in 2017 Item Nature Project Number Sector or Theme Division Advanced ICT tools to enhance equity and quality of Advanced Technology Pipeline Education SAHS education overcoming geographic constrains and lack of qualified teachers and quality learning materials ICT Application for Credit Information Bureau in Maldives: Upgrade and expansion of credit information bureau services and coverage Advanced Technology Grant 0290 Access to finance SAPF ICT Application in Tax Administration in Maldives: Advanced Technology Grant 0290 Public Finance SAPF Development of an integrated Point of Sale and Accounting software as required by Maldives Inland Monetary Authority; Enhancement for SAP Tax and Revenue Management module Total number of innovation, advanced technology, and pilot initiatives = 3 ICT = information and communication technology; SAHS = Human and Social Development Division, South Asia Department; SAP = system application and product; SAPF = Public Management, Financial Sector and Trade Division; South Asia Department. Sources: Asian Development Bank s South Asia Department.