Maldives' tourism-hit economy to get $24 million World Bank grant for income support

“As the economy recovers [from the Covid-19 pandemic], our assistance will increase access to economic opportunities by promoting employment in critical sectors such as tourism and renewable energy. It will also enhance social service delivery in the islands,” Faris H Hadad-Zervos, the World Bank Country Director for Maldives, Nepal, and Sri Lanka was quoted as saying by The Times of Addu.

May 30, 2022
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The World Bank has approved a $24 million grant to the Maldives for improving its social protection coverage and income support for workers under the Sustainable and Integrated Labor Services (SAILS) project. The Indian Ocean archipelago has a high unemployment rate, 5.3 percent in 2019, which has further deteriorated since the pandemic because of loss of tourism. The pandemic in 2020 had affected the country's tourism-dominated economy badly as its gross domestic product contracted by almost 30 percent, making the Maldives one of the worst-hit countries in the South Asian region.

“As the economy recovers [from the Covid-19 pandemic], our assistance will increase access to economic opportunities by promoting employment in critical sectors such as tourism and renewable energy. It will also enhance social service delivery in the islands,” Faris H Hadad-Zervos, the World Bank Country Director for Maldives, Nepal, and Sri Lanka was quoted as saying by The Times of Addu. 

Under the new Sustainable and Integrated Labor Services (SAILS) project, which aims to support the government in establishing an unemployment insurance scheme and an employment services scheme, both employers and employees will contribute jointly to a fund managed by the government.

The total financing, $24 million, is fully covered under a grant from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries.

Informal and self-employed workers will also be covered under the scheme, allowing them to access their funds under adverse conditions. 

Thomas Walker, a senior economist, and the task team leader said, “The COVID-19 pandemic impacted many workers, especially the self-employed, freelancers, and contractors and the government assistance softened the blow, but a large number of workers were still put on no-pay leave or dismissed.”

By establishing a contributory social insurance program, he added, the authorities will be able to lessen the financial burden of future macroeconomic and climate-related shocks and improve the country’s resilience to future shocks.

(SAM)

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