MALDIVES: GOVERNMENT FUND EFFECTIVE MECHANISM FOR

UNCLAS SECTION 01 OF 02 COLOMBO 000704 SIPDIS DEPARTMENT FOR SA, SA/INS NSC FOR DORMANDY E.O. 12958: N/A TAGS: EAID ECON PREL MV SUBJECT: MALDIVES: GOVERNMENT FUND EFFECTIVE MECHANISM FOR USG TSUNAMI RELIEF ASSISTANCE REF: COLOMBO 677 ¶1. Summary: During Ambassador Lunstead's April 7 meetings with Maldivian officials, several details regarding tsunami assistance funding in Maldives emerged. The government's National Fund and the UNDP are the two major funding mechanisms available for USG aid. The National Fund appears well organized, with financial officials emphasizing their willingness to work with individual donors on specific conditionalities and monitoring requirements. The UNDP also has well-developed rehabilitation plans and is working in conjunction with the government and the National Fund to ensure programs are fully funded and implemented. After our discussions with the government, the National Fund looks to be an effective vehicle for USG assistance. End Summary. -------------- Limited assistance options -------------- ¶2. In separate meetings with Government of Republic of Maldives (GORM) and UNDP officials, the following points regarding funding options for Maldives became clear: -- USG assistance can be directed to the GORM's National Fund (formerly Trust Fund),with earmarks and other conditions; -- USG assistance can be provided to UNDP/Maldives; -- Other UN agencies, e.g. UNICEF, and international Red Cross organizations and the International Federation of the Red Cross are oversubscribed; and -- No other international NGOs have long-term programs in Maldives. -------------- Assistance through the government fund -------------- ¶3. During his meeting with the Ambassador, Finance Minister Mohamed Jaleel underscored the flexibility and accountability aspects of the government's National Fund. For example, Jaleel said, GORM officials worked with Japanese government officials to establish specific conditions and earmarks for a Japanese donation to GORM's fund. He noted that the oversight board for the National Fund was not considered a "trustee," because board members would be in a supervisory position only, not authorized to make decisions on where or how the money is spent. (Note: The ADB is contributing its assistance through the GORM's National Fund, but it is not clear whether there will be earmarks or conditions on the donation.) ¶4. Although the GORM is only now finalizing a Public Finance Responsibility bill, Jaleel emphasized that the Fund was already operating under the guidelines the bill would recommend. He also said that operating principles for the National Fund were in accord with UN standards for best practices and that the Fund would have both internal and external auditors. ¶5. Explaining that the government was also concerned with the equitable use of relief funds, Riluwan Shareef, Executive Director at the Finance Ministry, said that his colleagues regularly analyze matrices that illustrate relief financing and programs, by sector, to identify any gaps in aid distribution. Shareef added he would engage with UNDP to increase government capacity for managing the relief work. -------------- Assistance through UNDP -------------- ¶6. Ambassador met with Patrice Coeur-Bizot, UNDP Resident Representative. Coeur-Bizot said that separate from other UN agencies, which are oversubscribed for tsunami assistance, UNDP is pursuing five tsunami redevelopment programs, which are not yet fully funded. As a stand-alone program, one is designed to provide coordination and support to enable Maldivian agencies to strengthen capacity in managing assistance funds and government redevelopment programs. A second program is to help the GORM in the area of disaster risk management, including the development of an internal warning system. ¶7. The remaining three programs -- shelter, livelihood, and infrastructure -- have been combined under the "Adopt an Island" initiative. The program is being marketed to both public and private sectors, with two funding modalities: through UNDP or directly as an earmark to the GORM's National Fund. UNDP is working with two implementing methods, one in which UNDP subcontracts the work, the second in which the GORM identifies sites for a specific project. UNDP officials are welcoming both cash and in-kind contributions for the Adopt an Island initiative. For example, with one recent "adoption," the local Banyan Tree resort offered its workers and laborers to rebuild homes on a nearby inhabited island and UNDP provided the materials and regular monitoring of the site. Ninety-five percent of the homes on the residential island have been rebuilt. In a separate "adoption," the government of Turkey provided assistance to the National Fund, earmarked for a rebuilding project identified in conjunction with the GORM and UNDP. ¶8. Ambassador asked Coeur-Bizot if he was concerned about possible involuntary relocation, given the GORM's plan to relocate many residents to "safe islands." Coeur-Bizot said that he was alert to the issue and was bringing in a relocation officer to deal specifically with that issue. ¶9. Coeur-Bizot said that a team of auditors from Deloitte-Touche was coming the following week to review the UN's operations and financial handling. By default, this would also involve some review of GORM financial management, he added. -------------- Comment -------------- ¶10. After continuous and extensive discussions with the government, the National Fund looks to be an effective vehicle for additional USG assistance. Government officials understand the high visibility of the Fund and the high importance of guaranteeing that the aid is managed in a transparent and accountable manner. They are willing to work with donors like the U.S. to meet any particular needs they may have. The government feels confident in its ability to make the fund successful in financing equitable redevelopment. After discussions with government officials, from President Gayoom to the Finance Minister, the Embassy is also confident that USG supplemental tsunami reconstruction assistance can be directed to the Maldivian Government's National Fund. End Comment. LUNSTEAD