The Ministry of Finance said the amount of subsidy on fuel and electricity will triple by the end of the current fiscal year due to absence of pre-planned measures to reduce fuel subsidies.
According to the “Statement of Fiscal Constraints” released by the ministry, the entire budget approved for energy subsidies this year topped out at MVR 594 million.
The subsidy cost is expected to reach MVR 1.5 billion by the end of 2023, the report said.
In 2022, MVR 530 million was allocated for fuel and electricity subsidies and the actual expenditure had reached MVR 3 billion.
Maldives government revised its subsidy policy to ensure sustainability of fuel subsidy expenditure. Instead of indirect subsidy provision for all, the revision ensures subsidy is targeted to the needy individuals.
While the 2023 State Budget said fuel subsidies will be provided according to the new regulation, the implementation of this has been postponed. The delay was due to concerns that the change will lead to an increase in electricity prices and place additional financial burden on households and businesses, said the ministry.
Maldives government has spent MVR 7.1 billion on subsidies so far in 2023, which is MVR 500 million excess of the budgeted amount.