MANILA, PHILIPPINES : The Asian Development Bank (ADB) has approved an $18.7 million policy-based grant for Maldives to help the country strengthen its fiscal management and create a pathway to restore fiscal sustainability over the medium to long term.
The Strengthening Fiscal Management and Sustainability Program supports structural fiscal reforms until 2025 by focusing on domestic resource mobilization as well as expenditure and debt management.
“The COVID-19 pandemic and the recent global economic downturn have exacerbated the country’s fiscal and debt situation,” said ADB Public Management Economist Chandan Sapkota. “ADB will support the country’s efforts to restore fiscal sustainability by prioritizing legal, regulatory, policy, and institutional reforms governing revenue mobilization, and expenditure and debt management.”
The support is financed by the Asian Development Fund, which provides grants to ADB’s poorest and most vulnerable developing member countries.
ADB has been working with Maldives to enhance domestic resource mobilization. Policy reform actions that support this includes the Parliament’s approval of the amendments to the Goods and Services Tax (GST) Act, Airport Taxes and Fees Act, Waste Management Bill 2022, as well as the Maldives Inland Revenue Authority’s approval of the Green Tax Regulation.
Other policy reform actions under the ADB program will include further amendments to the GST Act to broaden the tax base, approval of a medium-term revenue strategy, introduction of a compliance risk management framework, and amendments to the Income Tax Act.
Policy reform actions also include the submission to the Parliament a Sovereign Development Fund Act, which will provide the legal framework and clarity on investment regulations and guidelines, a new public debt management bill, amendments to the Fiscal Responsibility Act, and implementation of a Sustainable Financing Framework.
The program will also support the implementation of the Climate Emergency Act and the Maldives Energy Act to promote renewable energy sources, and the rationalization of fuel, electricity, and health care subsidies.
ADB will also provide an additional $1 million grant from its Technical Assistance Special Fund Debt Management Set-Aside to support the implementation of the program’s policy reform actions and capacity building of the Ministry of Finance and other implementing agencies.
The program will be followed by a post-program partnership framework that will guide the sustainability of the reforms and reinforce the public financial management reform strategy and action plan for 2022–2026, and the medium-term fiscal and debt management strategies.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
Source: adb
