DTIS, Volume I - Enhanced Integrated Framework (EIF)

CHAPTER 4
POVERTY REDUCTION AND HUMAN DEVELOPMENT
Chapter Plan
This chapter outlines the poverty profile of the Maldives and assesses progress in relation
to access to basic human needs including employment. Relatively high rates of
unemployment with significant gender disparities as well as labour market rigidities are
among the critical challenges facing the Maldives.
I. Poverty Profile
The Maldives has achieved considerable progress on human and social development over
the past two decades. The Human Development Index ranked the Maldives at 84 in
2004, a ranking that dropped to 96 in 2005, due to the effects of the tsunami. Social
indicators have improved steadily, reflected in declining rates of absolute poverty, falling
infant mortality rate and expanding school enrolments. The intensive proliferation of
primary school education on the islands has resulted in a 97 per cent literacy rate.
A series of recent social surveys provide excellent data and information on the Maldives’
poverty and human development profile including regional disparities and other
inequalities. Vulnerability and Poverty Assessments (VPA) were carried out in 1998
(VPA-1), 2004 (VPA-2) 22 and after the tsunami in 2005 (VPA-PT) in addition to a
Household Income and Expenditure Survey that was undertaken in 2002-03 (HIES). 23
These have established that the incidence of poverty is below 2 per cent, on dollar a day,
purchasing power parity (PPP) terms 24 . The more recent VPA-2 confirmed this figure
and suggested a further decrease. At the time of the preparation of this DTIS, an ongoing
post-tsunami VPA (VPA-PT) was assessing the tsunami impact.
However, as is to be expected, there is also evidence that despite falling absolute poverty,
levels of vulnerability and inequality are dynamic in nature and that progress as regards
poverty reduction in the atolls is slower than in Male’, the capital.
22 The VPA and VPA-2 surveys sponsored by UNDP, have established an excellent baseline for comparing
socio-economic dynamics over time.
23 HIES 2002-03, MPND, 2005 (sponsored by UNDP, UNESCAP and ADB)
24 The PPP is expressed as what one US dollar could buy in New York in 1993 compared to what it could
buy for the same item in other geographical locations in the same year. This is also known as the
international dollar and is used widely to establish parity. As prices are generally lower in developing
countries, the nominal exchange rate underestimates the purchasing parity in these countries. A direct PPP
comparison for the Maldives has not yet been made, but using data from neighbouring countries an indirect
estimate is possible indicating an international dollar exchange rate of Rf. 3.516 in 1993.
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