ADB unveils five-year strategy to help Maldives manage debt, strengthen SOEs

The Asian Development Bank (ADB) has endorsed a new five-year strategy for the Maldives focused on supporting debt management, strengthening the governance of State-Owned Enterprises (SOEs), and addressing other key areas of economic development.

In an announcement on Wednesday, the ADB confirmed the endorsement of the Country Partnership Strategy (CPS) for the Maldives, spanning from 2027 to 2031. This strategic framework outlines the bank's forthcoming projects and identifies priority areas for assistance over the next five years.

According to the ADB, the primary objectives of the strategy are to strengthen the country's fiscal sustainability, enhance energy security, and build resilience against natural hazards.

The bank revealed that the strategy is built upon two interconnected priorities: improving fiscal management and diversifying energy sources while accelerating the adoption of renewable energy. The ADB highlighted that diversifying energy sources would reduce the cost of fuel subsidies, thereby strengthening fiscal sustainability. Furthermore, improved fiscal management is expected to support investment in climate resilience.

To achieve these goals, the ADB will provide financing to the public and private sectors, as well as technical assistance and knowledge support. The bank committed to supporting institutional reforms to strengthen debt management, modernize revenue administration, and improve the performance of SOEs.

Additionally, the ADB aims to work towards reducing the fiscal risks posed to the state by energy and waste management utilities.

Commenting on the strategy, ADB Regional Head for Regional Cooperation and Integration Thiam Hee Ng noted that while the Maldives has made significant development progress, it remains highly vulnerable to external shocks. He identified high public debt, constrained public finances, heavy reliance on imported fuel, and increasingly frequent extreme weather events as major challenges facing the nation.

 “The new country partnership strategy aims to support critical structural reforms and investments to strengthen the country’s fiscal position and long-term resilience,” he added.

Under this strategy, the ADB will provide support for solar energy generation, battery storage systems, waste-to-energy initiatives, and upgrades to electrical grids to facilitate greater integration of renewable energy. These efforts are intended to make existing electricity networks more reliable and efficient.

The ADB also emphasized that across all its interventions, priority will be given to promoting digital transformation, increasing private sector participation, and advancing gender equality.

The ADB’s partnership with the Maldives dates back to 1978. Statistics indicate that as of December 31, 2025, the bank had committed 128 public and private sector loans, grants, and technical assistance totaling USD 606 million.

With over 30 SOEs, many of which operate at a loss, the fiscal burden on the state remains significant. These companies employ over 41,000 people and require ongoing budgetary support. Although the current administration initially decided to dissolve or merge certain companies to reduce costs, new state-owned entities have since been established. Concerns have also been raised regarding the mass recruitment of staff into SOEs coinciding with election periods.

Furthermore, allegations of corruption within state companies have persisted across successive administrations. However, public grievances remain regarding the failure to recover misappropriated state funds and the lack of adequate investigation or resolution of such issues.

The announcement of the new ADB strategy follows the bank's recent economic report, which warned of heightened risks to the national economy due to delays in implementing essential reforms to state-owned enterprises and subsidy schemes.