The World Bank’s Board of Executive Directors has approved a USD15 million project to strengthen private participation in and financial sustainability of state-owned enterprises (SOEs) and the mechanisms that support the competitiveness of small and medium enterprises (SMEs) in the Maldives, including legal and regulatory frameworks, access to finance, institutional capacity development, and fiscal sustainability support.
The Maldives Competitiveness and Growth Project aims to help the government enhance private participation in select SOEs, improve the way these enterprises are governed, and reform their public service obligations and subsidies. The project will also help make the private SMEs in the Maldives more competitive by improving digital financial systems to make it easier for them to access commercial loans and assisting selected innovative and capable SMEs to enhance their growth trajectory and develop new and climate-friendly products to compete in new markets.
Country Director of the World Bank to the Maldives, Sri Lanka and Nepal Faris. H. Hadad-Zervos said the COVID-19 pandemic and uncertainty in the global environment have had a profound impact on the growth trajectory of the Maldives, affecting both SOEs and SMEs across the country. He also said that the project will help expand economic opportunities for the private sector and introduce critical reforms of SOEs and will contribute over time to enhancing the country’s fiscal health.
Maldives is an upper-middle-income country, but its economy relies heavily on just a few industries. The World Bank stated that economic growth has slowed recently, and issues with government spending and debt have worsened. The World Bank also stated that the country has made some improvements in resolving important economic problems, but more work is needed to bolster economic growth.
The Maldives Competitiveness and Growth Project will be implemented by the Ministry of Finance. The total financing is USD5 million, which is comprised of a USD7.5 million grant and a USD7.5 million credit from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries.