World Bank has said that seizing green energy opportunities through increased investments in renewable can contribute to post COVID-19 economic recovery and create more jobs in the Maldives.

World Bank Maldives Development Update released today said that an in-depth look at the country's economy and future outlook, highlights the high toll that the pandemic has inflicted on the nation’s economy. And as a result of the shutdown of tourism, the Maldives main economic driver, growth is projected to contract by between 13 and 17.5 percent in 2020 before rebounding to between 7.9 and 8.5 percent in 2021 as tourism gradually recovers.

The Maldives Development Update is a World Bank publication that discusses the country’s recent macroeconomic developments and outlook, as well as relevant development challenges.

The report stated that to buffer the impact of the crisis, the government has introduced a series of fiscal and monetary measures. The relief package includes loan moratorium and emergency financing for businesses, as well as income support for individuals and discounts on utility bills for poor and vulnerable households. However, despite large cuts to both recurrent and capital spending, the revenue shortfall resulting from the crisis is expected to elevate the fiscal deficit to at least 14.5 percent of GDP.

“The Maldives has enjoyed high growth rates in the past few years. But the shocks stemming from the COVID-19 pandemic has upended the Maldives development trajectory and severely affected the Maldivian people,” said Idah Z. Pswarayi-Riddihough, World Bank Country Director for Maldives, Nepal, and Sri Lanka. “Focusing on renewable energy can prove to be a good investment at this time – creating jobs and improving the country’s ability to rebound stronger, when opportunities open up.” The World Bank report said.

The report also included a special focus section on the importance of scaling up renewable energy generation in the Maldives as the locals have enjoyed universal access to electricity since 2008, but heavy reliance on imported diesel and isolated island-based grids drive up the costs of electricity generation and noted that even with subsidies, which add to the government’s fiscal burden, electricity tariffs are among the highest in the region - which puts additional burden on households.

To alleviate these challenges, the report recommends facilitating more private sector investments in renewable energy, especially in solar photovoltaic technology. While the required upfront investments are high, investing in renewables can help the Maldives to lower its cost of electricity service, fuel import bill and subsidy expenditure, reduce carbon emissions and create new jobs.

Lead authors of the report, Florian Blum and Pui Shen Yoong said that “the COVID-19 crisis illustrates the urgency of strengthening the Maldives’ resilience to external shocks. While the crisis may have hampered efforts to increase its share of renewable energy in electricity generation, this remains a crucial goal”.

The Senior Energy Specialist at World Bank and author of the Special Focus Section, Joonkyung Seong added that scaling up these investments will require greater participation from the private sector, which can be encouraged through power purchasing agreements, net metering and improved system planning.