Enhancing Debt Sustainability (ADB-55263-001)

  • South Asia
Geographic location where the impacts of the investment may be experienced.
  • Maldives
Geographic location where the impacts of the investment may be experienced.
Specific Location
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
Financial Institutions
  • Asian Development Bank (ADB)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Nov 22, 2021
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
  • Technical Cooperation
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Advisory Services
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 1.20 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ ADB website

Updated in EWS Apr 25, 2022

Disclosed by Bank Nov 22, 2021

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to ADB documents, the knowledge and support technical assistance (TA) will support public debt sustainability in Maldives by focusing on institutional strengthening for sound fiscal policy framework, particularly domestic resource mobilization and public investment management. The TA is included in the country operations business plan, 2021- 2023 for Maldives.


Coronavirus disease (COVID-19) has severely affected the economy. Gross domestic product (GDP) is estimated to have contracted by 33.6% in 2020 as travel and tourism, and construction activities got severely disrupted by restrictions imposed to contain the pandemic. Tourist arrivals hit an all-time low in 2020, collapsing by 67%. Poverty is estimated to have increased to 7.2% in 2020 from 2.1% before the pandemic. With travel and tourism activities and related services such as communication, real estate, and entertainment contributing over 40% of GDP, 80% of exports and about 50% of total revenues, Maldives' economy is vulnerable to natural as well as global economic and health shocks.

The unprecedented pressure on public expenditure, especially to boost healthcare spending and social protection, amidst low revenue mobilization has heightened fiscal stress. Revenue mobilization contracted by 38.7% in 2020 while expenditure increased by 5.7%, resulting in fiscal deficit of 27.5% of GDP in 2020, up from just 6.6% of GDP in 2019. In 2020, public expenditure net lending, and total revenue including grants were 52.8% and 25.4%, respectively, of GDP. The government intends to scale up public sector investment programs (PSIPs) in 2021 and expects substantial increase in non-tax revenue, lowering fiscal deficit to 18.5% of GDP. Almost half of the investment required for PSIPs is financed by borrowing, often non-concessional external borrowing that potentially adds to external debt distress. Proper sequencing and prioritization of such projects are essential to ensure that well vetted investment project pipeline is consistent with fiscal and debt carrying capacities. In recent years, fiscal deficit and public debt have consistently overshot 3.5% of GDP and 60% of GDP thresholds, respectively, specified in Fiscal Responsibility Act.

Challenging macroeconomic fundamentals narrow economic and taxpayer base, weak public financial management (PFM), high fiscal and current account deficits, and vulnerability to external and climatic shocks complicate debt distress vulnerabilities. The country was at a high risk of debt distress even before the pandemic. In its April 2020 Debt Sustainability Assessment, the International Monetary Fund (IMF) assessed Maldives' public debt as sustainable contingent on implementation of substantial fiscal consolidation strategies as promised in the recent budget and macroeconomic policy frameworks. However, the country remains at high risk of external debt distress and a high overall risk of debt distress. The country's debt carrying capacity is assessed to be weak by IMF. Maldives participated in the G-20 Debt Service Suspension Initiative. Public and publicly guaranteed (PPG) debt was estimated at 149.3% of GDP as of yearend 2020, a sharp increase from 78.3% of GDP at yearend 2019. The government estimated a total outstanding PPG debt to reach 124.1% of GDP in 2021.

A faster growth of public expenditure relative to revenue growth together with high cost of borrowing pose a binding constraint to a stable macrofiscal framework and debt sustainability. High public expenditure is partly due to the inclusion of mega infrastructure projects as well as other ad hoc projects sans cost benefit analysis and proper due diligence, implying weak public investment management process. Sequencing, screening, and prioritization of PSIPs are important to ensure that capital spending surge is consistent with available fiscal space and high debt distress situation. Meanwhile, higher revenue mobilization is constrained by weak taxpayer compliance and audit capacities of the authorities. Non-compliance in the case of goods and services tax was as high as 32% in 2019. Tax revenue stagnated at around 19% of GDP before the pandemic but is projected to decline to 16.5% of GDP in 2021. The 2020 Public Expenditure and Financial Accountability (PEFA) assessment shows that the country has scored low (C+ and below) in public investment management, fiscal risk reporting, fiscal strategy, medium-term perspective in expenditure budgeting, revenue administration and accounting, and internal and external audit.

The TA is aligned to the government's priority to lower debt distress and improve fiscal management to support implementation of Strategic Action Plan 2019 -2023. The TA support aligns with the country partnership strategy's objective of enhancing public sector efficiency and fiscal sustainability, is included in country operations business plan 2021 -2023, and is consistent with Medium-term Fiscal Strategy 2021 -2023 and the upcoming PFM Reform Strategy 2021- 2025. It prioritizes capacity building on areas where Maldives' PEFA 2020 score is C+ and below and will support adherence to International Development Association's Sustainable Development Finance Policy. The proposed TA activities are designed in close coordination with development partners.


Debt vulnerabilities and overall debt reduced


ADB will engage the consultants and carry out procurement following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions


Request for quotation on computers, software, and other small office equipment to be procured by ADB.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

The TA is estimated to cost $1,320,000, of which $1,200,000 will be financed on a grant basis by ADB’s Technical Assistance Special Fund (TASF-7).17 The Government of Maldives will provide counterpart support in the form of counterpart staff, office accommodation, and other in- kind contributions. The key expenditure items are listed in Appendix 2.

Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.
Responsible ADB Officer Sapkota, Chandan
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Ministry of Finance (formerly Ministry of Finance and Treasury)
Ameenee Magu, Block 379, Male', Republic
of Maldives


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The Accountability Mechanism is an independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an Asian Development Bank-financed project. If you submit a complaint to the Accountability Mechanism, they may investigate to assess whether the Asian Development Bank is following its own policies and procedures for preventing harm to people or the environment. You can learn more about the Accountability Mechanism and how to file a complaint at: http://www.adb.org/site/accountability-mechanism/main.

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