Male, Mar 28 (IANS): The Asian Development Bank (ADB) signed a $41 million financing package with the Bank of Maldives (BML) on Tuesday to support locally owned small and medium-sized enterprises (SMEs) and tourism.

As the sole mandated lead arranger and bookrunner, the Manila-based ADB has arranged, structured, and syndicated the entire financing package, comprising a loan of up to $13 million from the ADB's ordinary capital resources, a parallel loan of up to $13 million from the Japan International Cooperation Agency, and a parallel loan of up to $5 million from the Development Bank of Austria, reports Xinhua news agency.

To improve development impact and to address bankability issues relating to blue economy transactions in Maldives, the ADB said it blended the project's debt financing with a concessional loan of up to $9 million from the Canadian Climate Fund for the Private Sector in Asia II (CFPS II) and a grant of up to $1 million from the ADB's Asian Development Fund (ADF)-Private Sector Window (PSW).

"The blue economy is crucial to future prosperity in Maldives, as its people and economy are intrinsically linked to the health and wealth of the ocean, coral reefs, beaches and marine life. However, investments in the blue economy, including by SMEs and through climate adaptation projects, have been lacking," ADB Director General for Private Sector Operations Suzanne Gaboury said.

She added the ADB partnership with BML, Maldives' largest bank, will deliver much-needed financing to the tourism sector and support climate projects and locally owned SMEs, including those owned and run by women.

The ADB said at least 60 per cent of the loan package will be earmarked for lending to SMEs, and 5 per cent will be allocated to women-owned or led firms.

The ADB said the CFPS II loan and PSW grant will support BML's capacity to support and promote climate change mitigation and adaptation projects focused on the blue economy.

Maldives is highly vulnerable to natural hazards and extreme climate events due to its fragile ecological profile and low elevation.

Moreover, Maldives lacks domestic conventional energy resources and is dependent on imported fossil fuels.

The ADB said financing from ADB-administered funds will help improve the resilience and sustainability of the economy, especially the tourism sector.