Tag: world bank

World Bank reiterates concern over unsustainable spending

The Maldives is spending beyond its means with government expenditure outstripping revenue for years, the World Bank has warned.

Contrary to the government’s estimate of 3.4 percent of GDP for the fiscal deficit in 2014, the World Bank said the deficit has been on “an upward trajectory since 2011” and reached an estimated 11.6 percent last year.

“Despite high revenue of 32.4 percent of GDP, Maldives is spending beyond its means reaching 44 percent of GDP, leading to persistent fiscal imbalances,” reads the South Asia Economic Focus 2015 report released last week.

“Subsidies, transfers and social welfare payments contributed substantially to the expansive spending,” the report stated.

The spike in expenditure resulted from President Abdulla Yameen’s decision to increase wages and an allowance to senior citizens from MVR 2300 to MVR 5000.

The World Bank meanwhile said the country’s risk of external debt distress has been reduced from high to moderate due to revised estimates of a lower current account deficit.

However, overall public debt is high at 74.6 percent of GDP in 2014, the report noted.

“Although the level of external public and publicly guaranteed debt remains below the policy-dependent thresholds under the baseline, a shock to tourism exports could make it difficult for the country to service its external debt,” the World Bank cautioned.

While imports and tourism receipts nearly balance each other out, the report explained that  “substantial outflows through interest payments, dividends and remittances keep the current account in a deficit at 8.0 percent of GDP.”

“The current account is more than fully financed by Foreign Direct Investment (FDI), and gross international reserves are estimated to have increased. Net FDI inflows are estimated at 13.3 percent of GDP,” it added.

Usable reserves are estimated at US$120 million, enough for less than half a months imports, but “the private sector is able to supply sufficient quantities of foreign exchange.”

“Faced with limited investment opportunities in the private sector, banks are parking their assets elsewhere; meanwhile financial soundness indicators have been improving,” it added.

Challenges

While the government’s forecast for economic growth in 2015 is 10.5 percent, the World Bank said growth is projected at five percent and warned of a negative impact from spending cuts.

The International Monetary Fund has also welcomed the government’s cost-cutting and revenue raising measures for 2015, including imposing a green tax, acquiring fees from Special Economic Zones, raising import duties, a public employment freeze, and better targeting of subsidies.

The World Bank meanwhile suggested that state-owned enterprises may pose risks as “most are loss-making and depend on government support”.

Only nine companies have contributed dividends in the past four years, it noted.

“The immediate macroeconomic challenge is the fiscal and external imbalances driven by high and rising public spending,” the report advised.

“However, the economy also remains undiversified and sources of growth and employment remain misaligned. Besides, Maldives’ form of tourism- led growth has followed an enclave model, reliant on imported goods, labor and finance.”

Balancing the budget in two years is a campaign pledge of president Yameen, who said last year that the record MVR24.3 billion (US$1.5 billion) state budget for 2015 has a “primary balance surplus.”

The projected fiscal deficit for 2015 is MVR1.3 billion (US$84 million) or 2.5 percent of GDP, which president Yameen said was allocated for arrears or unpaid bills from recent years.

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Maldivian Youth “disenfranchised and excluded”, finds World Bank report

Maldivian youth feel “disenfranchised and excluded” and “disconnected from the fabric of society” suggests a World Bank report released today.

Rising globalisation, internet use, and economic expansion has “exposed young women and men to the outside world and new ideas and values, making them acutely aware of what they can aspire to,” read the report.

“Yet, both female and male youth face the shackles of the limited island economy, lack empowerment and community engagement, and contend with rigid norms of behaviour and increasingly conservative values, as well as an inadequate education and training system that ill prepares them for the labor market.”

The report argued that these issues meant that many young Maldivians are being “denied passage into adulthood”.

Titled ‘Youth in the Maldives: Shaping a new future for young women and men through engagement and empowerment’, the report was compiled using focus groups and surveys, in order to address the “dearth of data” on young people in the country.

Physical isolation, thwarted expectations, family breakdown, and gang participation were revealed as major challenges facing 15-24 year olds, while new insights were offered into the country’s large youth unemployment problem.

The World Bank recommended a concerted national youth campaign to present a new vision of youth, an increase in preventative healthcare, and further efforts to better understand the reasons for youth unemployment.

President Abdulla Yameen has maintained a pro-youth rhetoric since his election in 2013, pledging to create 94,000 jobs for the Maldivian youth – officially recognised as being aged between aged 15-35.

As well as launching a youth unemployment register and clearing the criminal records for many youth offenders, the government has recently launched the ‘GetSet’ entrepreneurship programme, in which young people between the ages 18-25 can apply for business start-up loans.

Unemployment

The Maldives has the highest percentage of youth unemployment in the South East Asia region with 22 percent of its youth unemployed, stated the World Bank report.

It found that young people lacked socio-emotional and other skills required in the job market, but that young people expect high or unrealistic wages, leading to the “national phenomenon” of “youth voluntary unemployment”.

“Added to this reality are the perceptions and expectations of parents with regard to what is an acceptable job and wage for their children, leading to limited support and encouragement for youth to be economically active,” the report continued.

Interviews and focus groups suggested that parents were actually contributing to youth unemployment by supporting them financially so as to avoid undesirable employment.

“Findings indicate that parents would rather pay their sons and daughters not to work than to let them work in a job which they consider beneath them; a notable 50% of young people surveyed in the field-based research solely stated that they rely on their parents as their main source of income,” the report read.

The reports also noted rising inter-generational tensions as the Maldives continues to undergo rapid social transformation.

“Older generations (adults) frequently see youth as ‘unambitious,’ ‘lazy’ and ‘disconnected,’ and focused on ‘me’ rather than ‘us,’ while the younger generations, especially those young men and women who have studied or worked in Malé and beyond, see themselves as part of a global village, fast-paced and modern society, where individual aspirations over take family traditions.”

The physical isolation caused by geographical distribution of the islands was also found to present difficulty in travelling, mobility, and accessing public services leading to limited opportunities -especially for women – the report found.

Changes needed

Addressing the growing issues of gang membership in the country, the World Bank noted that young people were joining gangs for reasons including inactivity and apathy, unemployment, drug use, and “the need for young men to prove their masculinity”.

Gangs were also said to fill a need for support and social structure as well as for male role models, with high rates of divorce meaning the Maldives has one of the highest rates of female-headed households in the world (35 percent).

“A further problem is that people with drug or criminal offenses experience difficulties in reintegrating into society and finding jobs; access to counseling and rehabilitation services, especially for young people, is limited and inadequate,” the report said.

In recent years gender inequality has also worsened in the Maldives, the report continued, with civil society groups reporting “significantly increasing restrictions” on how women dress, mobility, forms of employment, and the ability to make independent decisions.

Lack of reproductive health facilities were also cited as a problem in the report, with a lack of sufficient knowledge about preventative healthcare placing young people at risk.

The report concluded by calling for a long-term strategy of broad youth empowerment.

“Engaging youth to be productive and content members of society will first and foremost require a radical shift in the way that youth are perceived and valued by adults, policy makers and society-at-large,” concluded the World Bank.

Read the full report here


Related to this story

Democracy House launches #policy22 campaign calling for youth participation in policy-making

President Yameen launches MVR200 million ‘Maldives Youth Entrepreneurship Programme’

President Yameen calls on youth to relocate to Hulhumalé

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Environment minister meets World Bank mission

Environment Minister Thoriq Ibrahim met officials of a visiting World Bank mission yesterday to discuss implementation of climate change projects.

According to the ministry, discussions focused on preparation of the Climate Resilience and Environment Sustainability (CRES) Project under the second phase of the Maldives Climate Change Trust Fund (CCTF) as well as the fifth implementation support mission for the Wetlands Conservation and Corel Reef Monitoring for Adaptation to Climate Change (WCCM) project under the first phase of the Maldives CCTF.

The World Bank mission also held meetings with officials from the finance ministry, the CCTF Project Management Unit, the fisheries and agriculture ministry, the Marine Research Centre, the Environment Protection Agency, the Local Government Authority and WCCM project consultants.

The activities of the mission included undertaking project preparation on CRES as well as agreeing on the next steps, timelines, and responsibilities for the preparation process with the government of Maldives.

“The Maldives Climate Change Trust Fund is a multi-donor collaboration between the government of Maldives, the European Union, Australian Agency for International Development, the World Bank, and other multinational agencies which was launched in 2012,” explained the ministry.

Meanwhile, appearing for minister’s question time at parliament yesterday, Thoriq revealed that a special project was being planned to tackle water shortages during the dry northeastern monsoon.

The minister said a permanent solution could not be found through the project until 2016.

He noted that the government had to supply water to 82 islands facing shortages last year at a cost of MVR3.9 million (US$252,918). Some 75 islands have faced water shortages so far this year, he added.

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Finance minister fears spiralling deficit will leave civil servants without pay

Finance Minister Abdulla Jihad has expressed fear that the ballooning budget deficit will affect the government’s ability to pay civil servants.

“We can’t hold on like this for long, we must acknowledge that this is a very serious problem,” Jihad told atoll council leaders in Malé today.

Jihad explained that shortfalls in revenue of MVR1.5 billion would see the deficit increase to MVR4 billion – equal to 10.6 percent of GDP.

“Expenses keep on increasing, even as we don’t receive any revenue. We did not get the expected revenue this year either. Because of this, we are facing great difficulty in managing the budget deficit,” said Jihad.

Upon being elected last year, President Abdulla Yameen promised to prioritise reducing state expenditure, acknowledging that the Maldives was in a “deep economic pit”.

The government currently employs just under 25,000 civil servants, representing over 7 percent of the population. This high figure has long been identified as one of the causes of country’s fiscal imbalances.

Haveeru reported Jihad as saying today that his ministry was facing pressure every month when salaries are due.

“We try to make regular salary payments even if we have to take loans in order to do so. We haven’t, as of yet, received any salary issues this year. We are trying to make the salary payments through any means possible,” he was reported as saying.

Revenue gaps

Last month’s figures from the Maldives Monetary Authority (MMA) show the salary and allowances expenditure to account for 33 percent of spending, while the finance ministry has not published monthly expenditure reports since March.

The MMA’s latest figures also show the original estimated deficit of MVR1.3 billion – agreed upon last December as part of a record MVR17.96 billion budget.

The budget was inclusive of proposed revenue raising measures – many of which had failed to materialise during the previous administration – amounting to MVR3.4 billion, or 19 percent of the budget.

Despite some measures – including a rise in tourism taxes – passing the Majlis in February, Jihad predicted at the time that compromises would mean the full MVR3.4 billion would not be realised.

Both the outgoing and incoming governors of the MMA have this year called on the state to reduce expenditure alongside increased revenue.

The MMA’s 2013 Macroeconomic Development report said that shortfalls in revenue and overruns in expenditure could jeopardise the country’s debt sustainability – currently 81 percent of GDP.

The report – released in May – noted “there is a considerable amount of uncertainty surrounding the 2014 budget”.

The World Bank’s Maldives Development Update October 2013 described the country as “spending beyond its means,” risking serious damage to the economy,

Expenditure

Despite the government’s persistent promises to focus on the economy, subsequent policies have focused more on infrastructure development than fiscal consolidation.

Initial moves to reduce the salaries of political appointees were soon followed by promises to raise pension payments by 54 percent and the removal of the cap on the Aasandha health insurance scheme.

More recently, the government is facing the prospect of a potentially crippling payout to infrastructure giant GMR after a Singapore court of arbitration ruled in favour of the Indian company in a dispute over the premature termination of its airport concession deal.

Economic development plans have focused largely of large infrastructure projects and special economic zones to attract foreign investment – though no major deals have as yet been signed.

An IMF delegation visiting the country in February, however, expressed surprise at the economy’s continuing resilience.

“For a long time we’ve been saying that reserves at the MMA are very low and that the fiscal deficit is quite difficult and we expect the economy to run into some problems,” said resident representative Dr Koshy Mathai.

“But somehow the economy has shown resilience, a lot of resilience, and we’ve been surprised – happily surprised but surprised nonetheless.”

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World Bank provides US$6.5 million grant for public financial management system

The World Bank has approved a US$6.5 million International Development Association (IDA) grant to support the strengthening of the Public Financial Management (PFM) System of the Maldives, which would help “government institutions to make informed decisions on fiscal adjustments in an efficient manner”.

In a press release on Tuesday (July 15), the World Bank noted that “a high level of fiscal discipline” was needed for translating the current administration’s key policies and objectives into “a medium-term development strategy”.

“A key challenge for the country will be to ensure that the government’s social and economic goals are fully consistent with the urgent need for fiscal consolidation to restore fiscal and debt sustainability,” said Country Director for Sri Lanka and Maldives Francoise Clottes.

“We are happy to assist the government in this endeavour with both financial and technical support.”

According to the World Bank, “the project will help enhance budget credibility, transparency, and financial reporting of central government finances.”

“The entry points for intervention will be the Economic Policy Planning Section, National Budget Formulation and Analysis Section, Debt Management Division, Tender Evaluation Section, Secretariat of the Privatisation and Corporatisation Board, and Treasury and Public Accounts Division; internal audit sections; and line ministries.”

“The project design also includes support to strengthen the institutional framework of key Ministry of Finance and Treasury functions and to enhance knowledge transfer through on-the-job training by technical experts,” said Jiwanka Wickramasinghe, Task Team Leader of the Project.

The press statement noted that the proposed PFM Systems Strengthening Project would contribute to the government’s long-term and “overarching goal by addressing the most urgent PFM weaknesses.”

Macroeconomic challenges

In its annual global economic prospects report released last month, the World Bank had predicted a positive outlook for the Maldivian economy in 2014 with a projected GDP growth of 4.5 percent, “driven by strong tourist arrivals, particularly by robust growth in the Chinese tourist segment.”

The Maldives Monetary Authority (MMA) had also revealed earlier in June that economic activity expanded in the first quarter of 2014 “driven by the strong growth of the tourism sector during the ongoing high season of the industry.”

The central bank noted that the 10 percent annual increase in arrivals during the first quarter was “entirely driven by the significant increase (24 percent) in arrivals from the Chinese market.”

Meanwhile, in late May, a delegation from the World Bank led by the World Bank Vice President Philippe Le Houérou – in his first visit to the Maldives since assuming the post in July 2013 – met President Abdulla Yameen and agreed to work with the government in developing a national strategy for fostering growth and consolidating public finances.

The discussion focused on “the need to reduce fiscal deficits, create a favourable investment climate for the private sector and delivery of key public services,” according to a press release from the World Bank.

Le Houérou noted that the challenges faced by the Maldives includes “balancing public accounts while delivering public services on some 200 islands across hundreds of kilometres of the Indian Ocean.

The issue is how Maldives can make the most of its potential in order to achieve inclusive and sustainable development.”

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

In a report on macroeconomic developments in 2013, the MMA had warned that shortfalls in revenue or overruns in expenditure in 2014 “will undermine medium-term debt sustainability” and adversely affect the exchange rate and prices.

Despite a positive outlook for growth, “there is a considerable amount of uncertainty surrounding the 2014 budget. Overruns in current expenditure will most likely lead to financing difficulties for the government or further crowding out of the private sector,” the central bank warned.

“Any setback to fiscal consolidation either due to slippages in revenue or current expenditure will undermine medium-term debt sustainability and will have adverse implications for exchange rate and prices.”

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MDP to sue former President Waheed for defamation, damages over GMR airport deal cancellation

The Maldivian Democratic Party (MDP) is preparing to sue former President Dr Mohamed Waheed for defamation and damages over his administration’s unilateral termination of the GMR airport development deal.

The main opposition party announced in a press statement on Thursday (June 19), following a Singapore arbitration tribunal ruling that the agreement was “valid and binding”, that it would pursue legal action against the former president and other responsible parties in both Maldivian and international courts.

“Dr Mohamed Waheed Hassan Manik and his coup partners had spread falsehoods concerning the GMR agreement, incited hostility and antagonism towards the MDP among the public, and attempted to defame this party,” the press statement read.

“And [they] plunged the nation into serious strife and discord, paved for the way for a coup, and toppled the first democratically elected government of the Maldives in a coup d’etat.”

The party contended that Dr Waheed’s administration was responsible for the compensation the Maldivian government would likely have to pay GMR – which would be “a financial burden the country cannot bear” – as well as loss of investor confidence, soured bilateral relations, and the damage to the Maldives’ international reputation.

The concession agreement signed with the GMR-led consortium in July 2010 to Ibrahim Nasir International Airport was beneficial to the Maldives, the statement continued, and its abrupt termination was unlawful.

“Void ab initio”

In November 2012, following a campaign spearheaded by Adhaalath Party President Sheikh Imran Abdulla calling for the nationalisation of the airport, Dr Waheed’s cabinet declared the concession agreement void ab initio – invalid from the outset – and gave the consortium a seven-day ultimatum to hand over the airport.

On December 7, the government took over the airport and evicted GMR, prompting the Indian infrastructure giant to seek US$1.4 billion in compensation for “wrongful termination” of the contract – an amount that eclipses the country’s annual state budget.

In a letter sent to the Bombay Stock Exchange last week, GMR explained that the arbitration tribunal concluded the Maldivian government and the Maldives Airports Company Ltd (MACL) were “jointly and severally liable in damages to GMIAL for loss caused by wrongful repudiation of the agreement as per the concession agreement.”

The determination of liability – the first of two phases of arbitration – will now be followed by the determining of compensation owed.

In the wake of the arbitration decision, Attorney General Mohamed Anil said that President Abdulla Yameen’s administration would honour the verdict while expressing confidence that the government would not have to pay the US$1.4 billion sought by GMR.

“According to the agreement, [we] mostly have to compensate for the investments made. We said we do not have to pay the amount GMR has claimed. We always said we will have to pay compensation, and that this compensation has to come through the agreement,” Anil told reporters on Thursday.

President Yameen had predicted in April that GMR would only be owed US$300 million in compensation.

False pretext

Meanwhile, addressing supporters in Malé at an MDP maahefun (traditional celebratory feast ahead of Ramadan) Thursday night, former President Mohamed Nasheed argued that opposition parties misled the public to topple the MDP government in February 2012 with false allegations.

Opposition parties at the time had claimed that privatising the international airport posed a threat to Maldivian independence and sovereignty as well as Islam, Nasheed recalled.

The concession agreement with the GMR-led consortium was characterised as detrimental to the Maldives, he added, which was used as the pretext for the “coup” on February 7.

“Today it is becoming clear to us that the agreement was valid, and that it was terminated in violation of legal principles as well as international norms, in a way that causes serious damage to the Maldivian people,” Nasheed suggested.

Referring to AG Anil’s insistence that the compensation figure would not be too high, Nasheed accused President Yameen’s administration of continuing to mislead the public.

Nasheed stressed that the amount owed to GMR as compensation was not yet clear, noting however that the arbitration tribunal has ordered the government to pay US$4 million to the company to cover its legal expenses.

“The question we are asking now is, who will be paying those dollars? The dollars will be paid from our pockets. Legal action must be taken against those responsible for us having to pay these dollars,” he insisted.

“We have to seek compensation for the damage caused to our government. We know, we can see, that President Yameen’s government will not last. We know that President Yameen’s government does not have the support of the people. They cannot rule over all of the people in this country with the support of just 25 percent of the public.”

Changing the current government was “a duty and an obligation” for the MDP, the former president said, advising supporters not to despair.

“God willing, our courage will not flag. We will not be afraid and we will not back down either,” he said.

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World Bank predicts positive outlook for Maldivian economy in 2014

The World Bank predicts a positive outlook for the Maldivian economy in 2014 with a projected GDP growth of 4.5 percent, according to its annual global economic prospects report.

Economic growth would be “driven by strong tourist arrivals, particularly by robust growth in the Chinese tourist segment,” observed the report released last week.

“In the medium term, the economy is projected to grow at a more sustainable pace of about four percent annually, as tourism revenues from Europe pick up.”

The report did warn, however, that an increasingly likely El Niño conditions in the regions represented a medium-term economic risk.

GDP growth in 2015 and 2016 is projected at 4.2 percent and 4.1 percent respectively.

The Maldives Monetary Authority (MMA) had revealed earlier this month that economic activity expanded in the first quarter of 2014 “driven by the strong growth of the tourism sector during the ongoing high season of the industry.”

Total tourism receipts in the first three months of the year increased by 10 percent compared to the first quarter of 2013, reaching US$801.1 million.

The central bank noted that the 10 percent annual increase in arrivals during the first quarter was “entirely driven by the significant increase (24 percent) in arrivals from the Chinese market.”

Chinese tourists accounted for 27 percent of guests during the first quarter of 2014. Europe however retained the largest market share despite the continuing growth of the Chinese market, accounting for of 51.3 percent of all arrivals.

Challenges and risks

In late May, a delegation from the World Bank led by the World Bank Vice President Philippe Le Houérou – in his first visit to the Maldives since assuming the post in July 2013 – met President Abdulla Yameen and agreed to work with the government in developing a national strategy for fostering growth and consolidating public finances.

The discussion focused on “the need to reduce fiscal deficits, create a favourable investment climate for the private sector and delivery of key public services,” according to a press release from the World Bank.

“Maldives has enjoyed economic growth during the last decade and expects to achieve 4.5 percent growth in 2014,” Le Houérou was quoted as saying.

“But it still faces challenges, such as balancing public accounts while delivering public services on some 200 islands across hundreds of kilometres of the Indian Ocean. The issue is how Maldives can make the most of its potential in order to achieve inclusive and sustainable development.”

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

El Niño

The global economic prospects report meanwhile warned that impending El Niño weather conditions could be “a key medium-term risk” for growth in the South Asia region.

In 1998, catastrophic El Niño bleaching killed 95 percent of the Maldives’ corals – a key attraction for tourists – following three months of unusually high seawater temperatures that year.

The World Bank report noted that as of May “the likelihood of El Niño conditions in 2014-15 was assessed at 60-70 percent.”

“Strong El Niño conditions resulting in deficient rainfalls or drought can have more significant impacts. Although ample grain stocks should mitigate adverse effects on food security, weak agricultural performance could keep food inflation, and in turn, retail inflation, high—perhaps necessitating a tighter monetary policy stance than otherwise, which may have adverse implications for investment and growth,” the report explained.

Among other risks for South Asian economies were “stressed banking sectors” and slow pace of institutional reforms as well as geopolitical and financial risks.

“Given the reliance of the South Asia region on imported crude oil, it remains vulnerable to political developments in Ukraine and Russia that could result in tighter international oil supplies,” the report cautioned.

“An escalation of geopolitical tensions that cause crude oil prices to spike can significantly impact current account sustainability in the region.”

Other external risks include declining capital flows from high income countries – which could have “adverse effects on exchange rates” – and a sharp slowdown in China’s economic growth, which would “represent a risk for the global economy, and in turn, for regional growth prospects.”

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Expansion of economic activity in first quarter driven by tourism sector growth: MMA

Domestic economic activity expanded in the first quarter of 2014 “driven by the strong growth of the tourism sector during the ongoing high season of the industry,” according to the Maldives Monetary Authority’s (MMA) quarterly economic bulletin.

Total tourism receipts in the first three months of the year increased by 10 percent compared to the first quarter of 2013, reaching US$801.1 million, the central bank revealed.

“In Q1-2014, the average operational bed capacity of the industry also increased by four percent when compared to Q1-2013 and totalled 26,999 beds, contributed by the opening of more resorts and guesthouses during the period,” the bulletin explained.

“Despite the increase in the operational bed capacity of the industry, the occupancy rate of tourism accommodation facilities remained relatively unchanged at 84 percent when compared to Q1-2013, owing to the higher increase in bednights.”

Arrival trends

On arrival trends in the first quarter, the bulletin noted that the 10 percent annual increase in arrivals was “entirely driven by the significant increase (24 percent) in arrivals from the Chinese market.”

Chinese tourists accounted for 27 percent of guests during the first quarter of 2014. According to the Tourism Ministry, the Chinese market expanded by 24 percent with an additional 16,960 tourists compared with the same period of 2013.

Statistics from the Tourism Ministry show that 331,719 Chinese tourists visited the Maldives last year –  a 44.5 percent increase from the previous year.

Chinese tourists accounted for 29.5 percent of all tourist arrivals in 2013.

“Meanwhile, after recording three successive quarters of positive growth, arrivals from Europe (which constitute over half of total tourist arrivals) registered a marginal decline of two percent in Q1-2014, mainly due to a substantial fall in arrivals from Russia owing to its economic crisis and partly due to Easter calendar effects,” the bulletin continued.

“The poor performance of the Russian market (the third main market from Europe since Q2-2012) is in stark contrast to the double-digit growth rates exhibited by the Russian market throughout the last year.”

The bulletin noted that all major markets from Europe recorded a decline in arrivals. While arrivals from Germany – “the main source market from Europe” – and Italy both declined by four percent, arrivals from France declined by two percent.

“The better performance of UK market during the quarter is attributable to the sustained growth of the British economy since last year,” the bulletin observed.

Fisheries and construction sectors

The fisheries industry in the first quarter of 2014 “continued to be adversely affected by falling tuna prices in the international market since September last year,” the bulletin observed.

“This is reflected by the annual decline in fish purchases by collector vessels (12 percent) and the fall in both volume and earnings of fish exports in Q1-2014, by 26 percent and 6 percent, respectively,” the bulletin stated.

The construction industry however continued its “ongoing recovery” in 2014, the bulletin continued, which was “indicated by the strong annual growth in construction-related imports and bank credit to mainly residential housing construction projects.”

“Spurred by the strong performance of the tourism and other key sectors, activity in the wholesale and retail sector also picked up during the review period. This was reflected by a 13 percent increase in bank credit to the sector in the review period compared to Q1-2013, while private sector imports (excluding tourism) grew by 9 percent in the same period,” the bulletin read.

“Main driver of inclusive growth”

Meanwhile, a delegation from the World Bank led by the World Bank Vice President Philippe Le Houérou – in his first visit to the Maldives since assuming the post in July 2013 – met President Abdulla Yameen in late May and agreed to work with the government in developing a national strategy for fostering growth and consolidating public finances.

The discussion focused on “the need to reduce fiscal deficits, create a favourable investment climate for the private sector and delivery of key public services,” according to a press release from the World Bank.

“Maldives has enjoyed economic growth during the last decade and expects to achieve 4.5 percent growth in 2014,” Le Houérou was quoted as saying.

“But it still faces challenges, such as balancing public accounts while delivering public services on some 200 islands across hundreds of kilometres of the Indian Ocean. The issue is how Maldives can make the most of its potential in order to achieve inclusive and sustainable development.”

World Bank Country Director for Sri Lanka and Maldives, Francoise Clottes, noted the country’s “great success in developing a world-class tourism sector to take advantage of its breathtaking beauty.”

“This sector is expected to continue to grow and remains the main driver of inclusive growth and sharing prosperity, going into the future,” Clottes said.

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Incineration plant to be established on Raa Atoll Vandhoo Island

The Ministry of Environment and Energy has signed an agreement with Germany’s Michaelis GmbH and Co on Wednesday (February 19) to establish an incineration plant at Raa Atoll Vandhoo Island.

The incineration plant is to eliminate 40 tonnes of waste every day. It is to manage waste produced in all the islands of Noonu, Raa, Baa and Lhaviyani Atolls.

The US$2.6 million waste management project is funded by the World Bank and is expected to be completed in eight months and be functional by 2015.

Minister of Environment and Energy Thorig Ibrahim said the project will create 150 jobs. He said the government will establish waste management systems in three areas in the Maldives.

The General Manager of Michaelis Bernard Grim said the incinerator system can be used to produce ice in the long run.

The Environment Ministry said the incinerator plant is an environment friendly plant that can also produce energy from waste with further investments.

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