The World Bank’s Board of Executive Directors approved on Tuesday to extend USD 12.8 million for the 'COVID-19 Emergency Income Support Project', to support the Maldivian government to mitigate the economic impact of the ongoing COVID-19 pandemic on poor and vulnerable individuals.
According to a press release by the World Bank, the project cost comprises a USD 6.4 million grant and a USD 6.4 million credit from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries.
The project will mainly finance the Maldivian government’s COVID-19 Income Support Allowance scheme, which has been introduced to provide a temporary monthly allowance of up to MVR 5,000 to people who lost their employment or income as a result of the pandemic.
World Bank noted that the project will strengthen Maldives' capacity to distribute allowances and other cash transfers, as well as facilitate greater roles for local councils to help people across the country access support. The project will see the launching of an unemployment insurance programme, as well as a national social protection framework, to ease the impact of future emergencies on both employers and employees. Furthermore, the project will also review the current retirement pension scheme and other similar programmes.
“The drastic fall in tourism revenues and the constraints necessitated by the COVID-19 containment efforts have dealt a severe blow to low-income households who have lost their jobs or their source of income”, said the World Bank's Country Director for Maldives, Nepal, and Sri Lanka, Idah Z. Pswarayi-Riddihough.
“This project will support the government’s efforts to deliver cash transfers and food benefits directly to those who need them the most. The project will also strengthen the country’s social welfare system to improve its preparedness for future crises”.
World Bank went on to note that the project further aims to increase the capacity of Maldives' social protection programmes to respond to future emergencies.
“The current crisis shows the importance of having a safety net for all Maldivians, to prevent people from falling into poverty when times get tough", added the organisation's Senior Economist and Task Team Leader, Thomas Walker.
“This project will help build fiscally sustainable social protection programs that can reach any Maldivian who needs help".
The COVID-19 Emergency Income Support Project will be implemented in Maldives by the Ministry of Economic Development in collaboration with the National Social Protection Authority (NSPA) and Maldives Pension Administration Office (MPAO).
The World Bank, which projected that the economy of Maldives will be worst-hit in the South Asian region due to the fiscal and economic repercussions of COVID-19, has extended notable financial assistance to the island nation to mitigate the impacts of the pandemic.
To date, the organisation has approvedUSD 7.3 million for the country's COVID-19 response efforts, and a USD 10 million contingency financing to mitigate the economic and financial impact of the pandemic, under the Disaster Risk Management Development Policy Financing with a Catastrophe Deferred Drawdown Option (CAT DDO) which was signed in 2019.