President announces slashing electricity subsidies
President Ibrahim Mohamed Solih on Tuesday announced more austerity measures, stating that his administration intended to revise subsidies given to utility corporations and give electricity subsidies to only those who are the most disadvantaged.
In his speech to mark the country’s Independence Day, President Solih highlighted on the issues faced by the economy due to external pressures. He cited the ongoing Russia-Ukraine conflict as the biggest hindrance to taking the economy to pre-covid levels.
He did stress that Maldives did not sustain severe losses as some other nations, and that fuel prices had not rapidly changed in the country.
Crediting his administration’s policies for this, President Solih said it was the primary responsibility of the government was to absorb all these hardships so that the public did not experience it.
“The first aspect is to reduce government expenses; we are keeping government costs by reducing recurrent expenses month by month. We have halted several projects that are to be conducted through the budget. Along with it, we will be amending government policies to increase state earnings,”
Noting that budget on fuel subsidies had increased exponentially, he said changes need to be brought in.
Fuel subsidies are granted to reduce spend on fuel for general electricity usage and for fishermen. He said the general subsidy given on electricity need to be revised.
He announced the change was taken in to reflect the current situation on the economy and was vital to the economy. He added discussions and work had begun on defining, specifying, and implementing the change.
MVR 341.5 million (US$ 22.2 million) was set as fuel subsidies for this year. However, due to the Russia-Ukraine conflict, the expense on fuel subsidies had passed MVR 910.3 million (US$ 59.3 million) by end of June. Based on this trajectory, fuel subsidies are expected to hit MVR 1.95 billion (US$ 127 million) by the end of year.