Interim Country Partnership Strategy

August 2015

Maldives
2016

This document is being disclosed to the public in accordance with ADB’s Public
Communications Policy 2011.
 CURRENCY EQUIVALENTS
(as of 3 August 2015)

Currency unit – rufiyaa (Rf)

Rf1.00 = $0.065019
$1.00 = Rf15.38000

ABBREVIATIONS

ADB – Asian Development Bank

CPS – country partnership strategy
GDP – gross domestic product
ICPS – interim country partnership strategy
NDS – national development strategy

NOTE

In this report, “$” refers to US dollars.

Vice-President W. Zhang, Operations 1

Director General H. Kim, South Asia Department (SARD)
Officer-in-Charge R. Butiong, Regional Cooperation and Operations Coordination
Division, SARD
Team leader G. Bhatta, Principal Knowledge Management Specialist, SARD
Team members N. Bertsch, Financial Sector Specialist, SARD
S. Carrington, Economist, SARD
M. Fan, Senior Urban Development Specialist, SARD
L. George, Energy Specialist, SARD
A. Heriawan, Transport Specialist, SARD
S. Jagannathan, Senior Education Specialist, Sustainable Development
and Climate Change Department
R. Jones, Senior Natural Resources and Agriculture Economist, SARD
M. Nakane, Economist, 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.
 CONTENTS

Page

I. SCOPE OF INTERIM COUNTRY PARTNERSHIP STRATEGY 1

II. DEVELOPMENT TRENDS AND ISSUES 1
A. Economic Assessment and Outlook 1
B. Highlights of Previous ADB Country Strategy 1
III. THE COUNTRY STRATEGY 1
A. Government National Development Strategy 1
B. ADB Country Strategy 2
IV. STRATEGY IMPLEMENTATION 2
A. Indicative Resource Parameters 2
B. Program Overview 2
V. RESULTS MANAGEMENT 2
A. Monitoring 2
B. Risks 2
 I. SCOPE OF INTERIM COUNTRY PARTNERSHIP STRATEGY

1. This interim country partnership strategy (ICPS) for 2016 is being prepared in
accordance with the guidelines of the Strategy and Policy Department on interim CPS business
process, where the CPS and the government’s development strategy need to be synchronized.1
The current ICPS is for 2014–2015.2 The Government of the Maldives is formulating a national
development strategy (NDS), which will be finalized by the third quarter of 2015. The time lag
between the current ICPS and the full CPS is due to administrative reasons, so this ICPS is
being prepared according to provision 2(iii) of the Clarification Note. This bridging arrangement
will allow the new full CPS to be anchored in the government’s NDS.

2. The ICPS 2016 continues with the focus on sector selectivity, as identified in the ICPSs
for 2014–2015 and 2012–2013. Both of these earlier ICPSs were based on the 2011 country
assistance program evaluation recommendations from the Independent Evaluation
Department.3 The full CPS, to be prepared in 2016, will draw on the results of the CPS final
review validation (being carried out by the Independent Evaluation Department), as well as the
NDS. The indicative date for circulation of the new CPS to the Asian Development Bank (ADB)
Board of Directors is April 2016.

II. DEVELOPMENT TRENDS AND ISSUES

A. Economic Assessment and Outlook

3. The Maldives economy grew by 6.8% in 2014, up from 4.7% in 2013. Tourism and
related sectors, such as transport and communications, together contributed nearly 58% to
gross domestic product (GDP) growth and comprised about 45% of GDP. Growth was also
supported by strong performance in the construction sector, which contributed about 23% to
GDP growth. Tourism expanded strongly by 6.8%, albeit lower than the 9.0% growth seen in the
previous year. Growth remained strong in transport at 11.2% and communications at 9.6%. The
government projects economic growth to ease steadily until 2017 but at rates still within the
economy’s long-run trend. Tourism is expected to expand but at a declining pace.

B. Highlights of Previous ADB Country Strategy

4. During the 2012‒2013 ICPS, ADB resumed investment in the energy, transport, and
finance sectors in line with the core specializations of ADB’s Strategy 2020.4 The ICPS also
provided capacity development support to relevant sector agencies. The follow-up ICPS, 2014–
2015 carried over the same strategic thrusts and sectors of operations.

III. THE COUNTRY STRATEGY

A. Government National Development Strategy

5. The government, formed by the Progressive Party of Maldives and its coalition, is
working on an NDS that is based on its election manifesto and growth prospects. Work on the

1
ADB. 2014. Streamlined Business Processes – Clarification on Interim Country Partnership Strategy Business
Process dated 28 April 2014. Compendium of Clarifications. Manila.
2
ADB. 2014. Interim Country Partnership Strategy: Maldives, 2014-2015. Manila.
3
ADB. 2011. Country Assistance Program Evaluation: The Maldives. Manila
4
ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020.
Manila.
2

NDS is expected to be completed by the third quarter of 2015, which will be used in the
development of the full CPS, 2016–2020. The NDS will cover, in the main (i) the elected
government’s priorities; (ii) the public revenue envelope for the NDS that is determined by the
annual budget, which is based on a fiscal and other macroeconomic framework; and (iii) the
cycle of government policy analysis and formulation.

B. ADB Country Strategy

6. Given the limited Asian Development Fund country allocation for the Maldives, it is
important to be highly focused. The priority sector for the proposed ICPS 2016 will be transport,
whose outcome is enhanced movement of people and goods, including at regional level (this
will be in evidence in the work of the Kulhudhuffushi Harbor Expansion Project).5 ADB’s country
strategy for the ICPS 2016 is to contribute to the government’s sector outcome as stated here.

IV. STRATEGY IMPLEMENTATION

A. Indicative Resource Parameters

7. The indicative country allocation of Asian Development Fund resources for the Maldives
for the period of the ICPS 2016 is $9.69 million (of which $4.89 million is for 2015, and the rest
for 2016). During the ICPS period, funds for both 2015 and 2016 can be utilized together.

B. Program Overview

8. Only one project (Khuldhuffushi Harbor Expansion, for $9.69 million) will be carried out
during the ICPS period, which will contribute to the government’s sector outcome. However,
technical assistance (for $1,000,000) will be provided to support capacity building of relevant
government agencies for implementation of the harbor expansion project.

V. RESULTS MANAGEMENT

A. Monitoring

9. The country partnership results framework has been updated for the priority transport
sector (country operations and business plan, 2016–2018, Appendix 1). The government and
ADB will continue to monitor progress regularly in achieving country-level and ADB-specific
results through tripartite portfolio review meetings held twice a year.

B. Risks

10. Risks that were pointed out in the ICPS, 2014–2015 (related to governance as well as to
public financial management, public procurement, and anticorruption) remain valid for the ICPS
2016 as well (including, in particular, capacity constraints across the relevant government
agencies). In general, however, and as with the previous ICPSs, no serious governance risks
could fundamentally jeopardize ADB operations in the country in the prioritized sector during
this ICPS period.

5
ADB. 2014. Technical Assistance to the Maldives for Kulhudhuffushi Harbor Expansion. Manila.