Objective:

The proposed Results-Based Financing (RBF) aims to strengthen fiscal sustainability and promote climate-resilient investments.

Description:

The Asian Infrastructure Investment Bank (AIIB) approved a loan of USD15 million to the Government of Maldives towards the Strengthening Fiscal Management and Sustainability Program. The Results-Based Loan (RBL) aims to strengthen fiscal sustainability and promote climate-resilient investments. The program received a grant amount of USD2.74 million under the Special Fund Window for Less Developed Members to buy-down the interest of 100 basis points from the applicable interest.

The Program will provide a results-based financing to support a portion of the defined Government programs. It is designed to enhance the sustainability of the policy actions under the Strengthening Fiscal Management and Sustainability Program (a policy-based grant, or PBG) of the Asian Development Bank (ADB). The Program will support the Government's programs and consist of the following two results areas:

 1. Results area 1 (Green Taxation) - This results area will mainly support two Government programs related to green taxation: (i) widening of the coverage of tourism green tax beyond hotels to include integrated resorts etc.; and (ii) levy a tax on plastic bags as part of the commitment to phasing out single-use plastics (SUPs). The tourism Green Tax will exclusively go to the Government-established "Green Fund" which will finance climate-related projects as well as other green projects.

 2. Results area 2 (Climate Mitigation and Adaptation) - This Result Area will support Government programs to address climate change, including: (i) increasing the capacity of renewable energy; (ii) establishing new waste management facilities; and (iii) implementation of coastal protection measures in priority islands.

AIIB's Policy on the Project-affected People's Mechanism (PPM) applies to this Program. The PPM has been established by AIIB to provide an opportunity for an independent and impartial review of submissions from Project-affected people who believe they have been or are likely to be adversely affected by AIIB's failure to implement the ESP in situations when their concerns cannot be addressed satisfactorily through the GRM or the processes of AIIB's Management.

Information on AIIB's RBL Environmental and Social Systems Assessment (ESSA) Summary can be viewed here.