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Digital Technologies Can Help Maldives Build Back Better From the COVID-19 Shock

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Maldives can leverage digital technologies to build back better for a more green, resilient, and inclusive development following the COVID-19 pandemic, says the latest World Bank Maldives Development Update: A Digital Dawn released today.

The Maldives Development Update (MDU) notes that the country, post a massive pandemic led downturn, is firmly on the road to recovery. Thanks to successful marketing campaigns and relatively straightforward entry requirements, Maldives received more than 300,000 tourists in the first quarter of 2021. Assuming that a million tourists visit the country this year, the World Bank forecasts real GDP to grow by 17.1 percent in 2021. There are both downside and upside risks to the forecast.

The Update analyzes the devastating effect of the pandemic on the island nation’s economy. From end-March to mid-July 2020, the country was forced to close its borders to tourists, bringing the economy to a standstill. Tourist arrivals plummeted nearly 70 percent, leading real GDP growth to contract by nearly 30 percent compared to 2019. The government took steps to protect the lives and livelihoods of Maldivians, and yet the pandemic is expected to have led to a temporary increase in poverty.

“The Government of Maldives has shown the world that a safe reopening to tourism is possible,” said Faris. H. Hadad-Zervos, the World Bank Country Director for Maldives, Nepal and Sri Lanka. “With active management of the current macro-fiscal situation, Maldives’ medium-term growth prospects can continue to be positive given its strong reputation as a luxury destination and ongoing investments in tourist infrastructure.”

As Maldives builds back better from the COVID-19 crisis, addressing fiscal and debt vulnerabilities will be important. In 2020, the fiscal deficit reached nearly USD 900 million or 20 percent of estimated 2020 GDP. Total public and publicly guaranteed debt reached USD 5.6 billion or nearly 140 percent of estimated 2020 GDP. Although the recovery is now underway, Maldives’ fiscal deficit and debt ratio are expected to remain elevated over the medium term.

The pandemic has led to a spike in debt vulnerabilities across the globe, and Maldives is no exception,” said Fernando Im and Pui Shen Yoong, lead authors of the MDU. “Addressing these vulnerabilities would help Maldives build resilience to cope with unexpected future shocks”.

The special focus section of the MDU sheds light on how digital technologies can be game changers for Maldives’ growth and development. The COVID-19 pandemic has accelerated the digital transformation that was already underway, thanks to relatively high broadband and mobile internet penetration in the country. About 63 percent of the population used the Internet in 2019, a higher proportion than in other South Asian countries and peers outside the region. There is tremendous potential to use digital technologies to improve the delivery of services such as health, education, and disaster risk management, especially to outer atolls.

To leverage the digital dividend, Maldives needs to address policy, legal and regulatory gaps that currently inhibit the adoption of digital technologies. It also needs to boost Maldivians’ digital capabilities and skills to ensure that all Maldivians can take advantage of new technologies in an increasingly digital world.

“Wider use of digital technologies can help the government improve service delivery and allow smaller businesses and informal workers to expand access to markets,” said Junko Narimatsu, lead author of the special focus section. “However, for digital development to play a more prominent role in Maldives’ economic recovery, it is essential to close the digital divide between Male’ and the atolls.”

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Uzbekistan and World Bank to Expand Strategic Partnership

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Photo credit: Press Service of the President of Uzbekistan.

Anna, Bjerde, World Bank Vice President for Europe and Central Asia, visited Uzbekistan from September 29 to October 2, 2022, as part of a broader trip to Central Asia. Ms. Bjerde met with President Shavkat Mirziyoyev, as well as senior government officials, and beneficiaries of a World Bank-funded project that is helping improve rural infrastructure in Uzbekistan.

During her meeting with President Mirziyoyev, Ms. Bjerde discussed the results of 30 years of partnership between Uzbekistan and the World Bank, an anniversary which was celebrated in September this year. President Mirziyoyev and Ms. Bjerde noted in particular the achievements of the stepped-up World Bank financial and advisory support to help Uzbekistan implement transformative economic and social reforms since 2017, and they agreed to expand strategic bilateral cooperation across several economic and social spheres.

Ms. Bjerde also held talks with senior Uzbek government officials, including Deputy Prime Minister and Minister of Economic Development and Poverty Reduction Jamshid Kuchkarov, Deputy Prime Minister and Minister of Investments and Foreign Trade Jamshid Khodjaev, Minister of Finance Timur Ishmetov, Chairman of the Board of the Central Bank Mamarizo Nurmuratov, and Director General of the Agency for Strategic Reforms Shukhrat Vafaev.

In her meetings with counterparts, Ms. Bjerde discussed the implementation of the recently launched Country Partnership Framework (CPF) for Uzbekistan for the next five years. The CPF supports the authorities in developing the private sector to create new jobs and reduce poverty, improving human capital, building a green and sustainable economy, closing gender gaps, and creating conditions for wider citizen engagement. The CPF is aligned with the Development Strategy of the New Uzbekistan for 2022-26 and will help the authorities achieve the country’s ambitious development goals.

Ms. Bjerde and counterparts also discussed the progress of the Government’s reforms and World Bank support to reforming and privatizing state-owned enterprises and banks, modernizing agriculture, energy, financial and other strategic sectors, improving education, healthcare, and social protection services, developing transport connectivity, improving rural and urban infrastructure, empowering women, and improving the business and investment climate. Discussions were also held around the upcoming Country Climate and Development Report that the World Bank is preparing for Uzbekistan.

“We welcome that, despite the ongoing global shocks and crises, Uzbekistan’s path for reforms and development impact for its citizens through an inclusive and sustainable market economy transition remains the top priority for the Government,” said Anna Bjerde. “As we celebrate the 30th anniversary of the partnership with Uzbekistan, the World Bank looks forward to supporting the authorities reach their ambitious development goals through implementing the Country Partnership Framework which outlines our financial and advisory support for the reform agenda and priority development projects in the years to come.”

During her stay in Uzbekistan, Ms. Bjerde also visited Saroy village, located in the Jizzakh Region, and met with local residents, students, parents, and teachers. Saroy is one of 306 remote villages in five regions of the country benefiting from a rural infrastructure development project, which is being implemented by the Government with financial support from the World Bank and the Asian Infrastructure Investment Bank.

The project directly involves local communities through a participatory process to identify their infrastructure needs. In over 175 villages, residents have already produced community development plans, which will receive funding to implement sub-projects, such as the upgrading or construction of drinking water, gas, and electricity supply systems, roads, schools, and other basic infrastructure and services.

The residents of Saroy village voted for the rehabilitation of the local school that had been built decades ago and did not meet public building codes and standards. During their meeting with Ms. Bjerde, they presented the community’s experience in developing and supervising the implementation of a sub-project that completely rebuilt and expanded the school’s facilities. The school is now able to accommodate more students from Saroy and neighboring villages and is better equipped to ensure student learning.

The World Bank’s country program in Uzbekistan is among the top three largest in the Europe and Central Asia region. As of October 1, 2022, it consisted of 27 projects, with net commitments totaling around $4.76 billion.

These projects provide support in critical areas, such as macroeconomic reforms and the modernization of agriculture, water resource management, water supply and sanitation, energy, transport, health, education, social protection, urban and rural infrastructure, national innovation, tax administration, statistical and financial systems, etc. They also help in the mitigation of the health, social, and economic implications of the COVID-19 pandemic, as well as build resilience from the impacts of climate change.

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Egypt: US$ 400 Million Project will Help to Improve and Decarbonize Logistics

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World Bank approved a US$400 million development financing agreement to enhance the performance of the logistics and transportation sectors in Egypt and to support the shift towards low-carbon transportation along the Alexandria–the 6th of October–Greater Cairo Area (GCA) railway corridor.

Egypt’s rail system is one of the most extensive in Africa, with a generally heavier focus on its passenger services, and three freight trains per direction per day in the GCA with the rest dedicated to passenger trains. 

The Cairo Alexandria Trade Logistics Development Project will implement a railway bypass to the congested GCA. The bypass will provide freight trains between the Alexandria Sea Port and the newly constructed 6th of October Dry Port, with an alternative route to the west of Greater Cairo. The operational bypass will also allow 15 container trains per day by 2030, and as demand increases, 50 trains by 2060 to this dry port. Additional freight trains will flow between the Alexandria Port, Upper Egypt, and the Red Sea.  

The transportation sector is the second largest contributor to Egypt’s greenhouse gas (GHG) emissions after energy—contributing approximately 19 percent. Transporting containers and other freight by train has a lower carbon footprint than by road. The Bank estimates the project will reduce greenhouse gas emissions by 965,000 tons over 30 years.   

The project also supports advancing the government’s reform effort to improve the railway sector’s performance and promote private sector participation by creating Egypt’s Infrastructure Access Charging regime. This charging regime is similar to a toll on roads or airport fees. Private investors can operate their trains on the tracks of the Egypt National Railways Authority for a fee, hence boosting this authority’s finances. 

The Government of Egypt is committed to SDG 13: Climate Action by designing and implementing mitigation projects that establish an advanced, sustainable and clean transportation network, while also decreasing carbon footprint. Sustainable transport projects, many of which are carried out in cooperation with Egypt’s development partners and private sector, carry much significance in terms of driving the country’s economic growth and empowering Egyptian citizens across the country, connecting bigger cities and business districts, and providing more job opportunities. The Cairo Alexandria Trade Logistics Development Project will support national efforts to transition to lower carbon transportation and ensure the safe and fast delivery of people and goods; a key element in our growing economy,” said Dr. Rania A. Al-Mashat, Egypt’s Minister of International Cooperation.

The project will also encourage female labor force participation by supporting the professional development of female employees as well as the availability of childcare.  

The project will upgrade the track and signaling on four segments –including a greenfield one– between Alexandria, the 6th of October City, and the GCA to achieve an operational railway bypass to the GCA. This railway bypass will increase capacity particularly for freight trains while decongesting the Greater Cairo Area where demand for passenger trains is high.  

Reforming the transportation and logistics sectors is vital to Egypt’s competitiveness and economic development,” said Lieutenant General Kamel El Wazir, Egypt’s Minister of Transportation. “This new project introduces several improvements in those vital sectors. The improvements are aligned with Egypt’s pressing development priorities, which include decarbonization, trade facilitation, private sector participation, and gender balance in the workplace. Increasing the number of containers moved by rail from zero to 184,000 per year is one of the project’s key objectives. This flow of containers is primarily between the Alexandria Sea Port and the 6th of October Dry Port, both privately operated and railway oriented.”

The project will support Egypt’s integration into global value chains and its efforts to become a regional trading hub. This project will significantly contribute to Egypt’s 2050 Climate Change plan, given the expected reductions in greenhouse gas emissions.

This operation is part of a wider set of efforts dedicated to offering timely and comprehensive support to Egypt’s economic development and climate change plans,” said Marina Wes, World Bank Country Director for Egypt, Yemen, and Djibouti. “We hope that through supporting more job creation, including for women, a cleaner environment, and providing safer mobility, the operation will contribute towards a brighter and more prosperous future for all Egyptians.” 

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Financing to Support Liberia’s Reforms for Promoting Inclusive Economic Growth

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The World Bank Board has approved the third and last in a programmatic series of three Inclusive Development Policy Operations (IGDPO) designed to support key reforms that are critical to enabling inclusive growth. The financing, amounting to $55 million ($47.50 million International Development Association (IDA) concessional credit and $7.50 million IDA grant), will be disbursed as budget support. These reforms will remove distortions in key economic sectors, strengthen public-sector transparency, and promote economic and social inclusion.

The reforms supported in this programmatic series are aligned with the government’s objectives for improving access to quality agriculture seeds, clean and cheaper electricity, financial inclusion, access to social safety nets, and to other public services, especially for the poorest households, including refugees and refugee hosting communities.

We commend the Government of Liberia for successfully completing this programmatic reform series. The benefits of the reforms implemented are already becoming visible and include among others, the reduction in electricity tariffs and the cost of importing quality-verified solar products which will benefit many households in Liberia,” said Khwima Nthara, World Bank Liberia Country Manager.

This IGDPO builds upon the gains made under the first and second operations of this program approved in 2020 and 2021. The reforms supported by this operation will strengthen the regulatory environment to incentivize private-sector participation in the agriculture seed supply chain, through seed development, multiplication and certification. The actions supported under this operation will contribute to reducing commercial losses and strengthening Liberia Electricity Corporation’s (LEC) financial sustainability, as well as increasing access to solar energy. The previous operation supported the reduction of electricity tariff for poor households from US$0.385/kWh to US$0.22/kWh in May 2021, while this new operation further reduced the tariffs to US$0.15/kWh.

Numerous regulatory challenges that hindered the growth of digital financial services (DFS) have since been addressed by the Central Bank of Liberia (CBL), with active support from this budget support program along other World Bank Group  programs, resulting in Liberia’s National Financial Inclusion Strategy (NFIS) objective of increasing access to formal financial services to 50 percent by 2024 already being exceeded in 2021,” said Mamadou Ndione, World Bank Senior Economist and Task Team Leader of the IGDPO program.

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