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World Bank Maldives Development Update MALDIVES DEVELOPMENT UPDATE APRIL 2021 MALDIVES DEVELOPMENT UPDATE A Digital Dawn April 2021 A DIGITAL DAWN Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]. Photo Credits: Cover: Ahmed Nishaath; Part A1: Chi King; Part A2: Yaeesh Shifau – all via Unsplash; Part B: UNICEF Maldives. A Digital Dawn Maldives Development Update Preface The Maldives Development Update (MDU) has two main aims. First, it reports on recent developments in the Maldivian economy, placing these in a longer-term perspective and in a global context. Based on these developments, it analyzes the outlook for the Maldivian economy. Second, the MDU provides a more in-depth examination of a selected topic that is relevant to the country’s medium-term development challenges. It is intended for a wide audience, including policymakers, business leaders, think-tanks, non-governmental organizations, and the community of analysts and professionals interested in Maldives. The MDU was prepared by Fernando Im and Pui Shen Yoong (Macroeconomics, Trade and Investment Global Practice, South Asia Region), with assistance from Eddy Quach Trang. The special focus topic (Part B) on digital development was written by Gohar Malumyan, Junko Narimatsu and Pui Shen Yoong, with guidance from Siddhartha Raja (Digital Development Global Practice). The team is grateful to Upamanyu Datta (Poverty), Namoos Zaheer, Amila Indeewari Dahanayake, Adja Mansora Dahourou Simpore (Finance, Competitiveness and Innovation), and Thomas Walker (Social Protection & Jobs) for their inputs to Part A of the publication, as well as Hawwa Nashfa, Hideki Higashi, Gyorgy Bela Fritsche (Health, Nutrition and Population), Kwabena Amankwah-Ayeh, Suranga Kahandawa, Atishay Abbhi, Armando Guzman, Jessica Schmidt, Keiko Sakoda and Priyanka Dissanayake (Urban and Disaster Risk Management), Shobhana Sosale (Education) and Bertram Boie (Digital Development) for their insights and comments on Part B. The team also thanks Faris Hadad-Zervos (Country Director for Maldives, Nepal and Sri Lanka), Zoubida Allaoua (Director, Equitable Growth, Finance and Institutions – EFI, South Asia Region), Chiyo Kanda (Country Manager, Maldives and Sri Lanka), Manuela Francisco (Practice Manager, Macroeconomics, Trade and Investment), Nicole Klingen (Practice Manager, Digital Development), Taehyun Lee (Lead Country Economist, EFI), Aurélien Kruse (Lead Country Economist, EFI) and Mustapha Nabli (Consultant, EFI) for their guidance and comments on the report. Sashikala Jeyaraj provided valuable administrative support and the formatting of the report, while Shadiya Adam, Dilinika Peiris and Sudip Mozumder led dissemination efforts. The report was prepared based on published data available on or before March 30, 2020. Data sources included the World Bank, International Monetary Fund, Maldives Monetary Authority, Ministry of Finance, National Bureau of Statistics Maldives, press reports and data from Ookla® that are not publicly available. The team thanks the Ministry of Finance Maldives, the Ministry of Economic Development and private sector representatives for their inputs into the document. This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Photograph copyright: Ahmed Nishaath (cover); Chi King (Part A1); Yaeesh Shifau (Part A2) – all via Unsplash; UNICEF Maldives (Part B). All rights reserved. Previous report editions: • June 2020: In Stormy Seas To receive the MDU and related publications by email, please email [email protected].. For questions and comments, please email [email protected] and [email protected]. For information about the World Bank and its activities in Maldives, please visit: https://www.worldbank.org/en/country/maldives @WorldBank, @WBMaldives, follow hashtag #MDU2020 www.facebook.com/WorldBankSouthAsia instagram.com/worldbank/ www.linkedin.com/company/the-world-bank A p r i l 2 0 2 1 THE WORLD BANK Abbreviations ACH Automated Clearing House CAR Capital Adequacy Ratio cif Cost of freight CPI Consumer Price Index DAI Digital Adoption Index EOCC Emergency Operations Coordination Center ERP Enterprise Resource Planning fob Free on board GDP Gross Domestic Product HIES Household Income and Expenditure Survey ICT Information and Communications Technology ISP Internet service provider LAR Liquid Asset Ratio MDU Maldives Development Update MEMIS Education management information system MMA Maldives Monetary Authority MoCST Ministry of Communications, Science and Technology MRR Minimum Reserve Requirement MSMEs Micro, Small and Medium Enterprises pp percentage point PPP Purchasing Power Parity PSIP Public Sector Investment Program RBI Reserve Bank of India RTGS Real Time Gross Settlement System SAP Strategic Action Plan SBI State Bank of India SIDS Small Island Developing States STEM Science, technology, engineering and mathematics STO State Trading Organization T-bills Treasury Bills T-bonds Treasury Bonds TVET Technical and Vocational Education and Training UN United Nations UNDP United Nations Development Programme y-o-y year-on-year A Digital Dawn Maldives Development Update Table of Contents PREFACE ................................................................................................................................... I TABLE OF CONTENTS ........................................................................................................... IV EXECUTIVE SUMMARY: A DIGITAL DAWN ......................................................................... VI EXECUTIVE SUMMARY IN PICTURES .................................................................................... 8 A1. ECONOMIC UPDATE ..................................................................................................... 9 1. Context ....................................................................................................................................................................... 9 2. Real sector and inflation ........................................................................................................................................... 11 3. Poverty ...................................................................................................................................................................... 14 4. Monetary and financial sector ................................................................................................................................... 16 5. External sector .......................................................................................................................................................... 17 6. Fiscal sector .............................................................................................................................................................. 18 A2. OUTLOOK AND RISKS ................................................................................................. 25 7. Medium-term outlook .............................................................................................................................................. 25 8. Risks and priorities .................................................................................................................................................. 28 B. A DIGITAL DAWN ........................................................................................................ 29 1. Digital technologies can be gamechangers for Maldives’ growth and development ............................................... 29 2. Connectivity has improved, but adoption
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