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Gov changes policy to provide fuel subsidies only to necessary parties

Lamya Abdulla
26 July 2022, MVT 12:02
President Ibrahim Mohamed Solih shaking hands with some officers after the flag raising ceremony held on July 26, 2022, to celebrate Maldives' 58th Independence Day -- Photo: Fayaz Moosa / Mihaaru
Lamya Abdulla
26 July 2022, MVT 12:02

President Ibrahim Mohamed Solih announced on Tuesday that preparations are underway to change state policy so that fuel subsidies are given to only to the necessary parties, instead of making it available for all.

"... I would like to say that the government has begun work on implementing the changes. This is an essential burden for Maldives to carry in order to maintain a sustainable path of healthy economic growth," said the President, announcing the government's decision to reduce the cost of electricity and change the government's subsidy policy for fishermen.

In his address given in Dhivehi on the occasion of the 58th Independence Day, the President said that the government's estimates for fuel subsidies have increased significantly this year. He said that although MVR 341.5 million was allocated in this year's budget for oil subsidies, the government had spent MVR 910.3 million on fuel subsidies by the end of June alone.

He noted that the cost of fuel subsidies was high in the wake of the Russia-Ukraine war.

"It is now estimated that the government will have to spend a total of MVR 1.95 billion on oil subsidies by the end of the year if the situation continues," he said.

"It is important to consider all the situations that may arise from this prolonged war. This is the time to change economic policy in relation to this situation."

As it is, fuel subsidies are easily available to all parties now. The electricity bills in the country does not reflect the high cost of fuel as the government has been continuing to pay for fuel subsidies.

Not a big change to fuel prices

The President said that the price of fuel and goods has increased in the wake of the Russian-Ukrainian war, but that Maldivians have not yet been affected by the war as severely as other countries have been.

"The change in the price of fuel in Maldives is not even near the increase in the price of fuel in the international market. The reason is that the government is bearing the real burden," said President Ibrahim Mohamed Solih.

He said that it was important to take the necessary measures to maintain the Maldivian economy at this critical time. President Solih said that it was the responsibility of the government to work towards reducing the obstacles faced in providing services to the people, and that the government will continue to bear this burden.

He said the first thing the government needs to do to bear this responsibility is to reduce their expenditure. Therefore, recurrent expenditure is not being controlled on a monthly basis, he said.

"Some of the projects allocated from the budget have been halted for the time being. We are also implementing policy changes to increase state revenue as well," he said while noting the policy change made to provide fuel subsidies only to the necessary parties.

More obstacles post Covid

In his Independence Day address this year, the President noted that the circumstances have changed drastically from when Maldives celebrated its independence day in 2021. At the time, the Maldives was also in a state of fear due to the Covid-19 pandemic, and there were many economic difficulties and social challenges the nation faced due to the pandemic.

He said that despite the unprecedented decline in the Maldivian economy due to the pandemic, the measures taken by the government have resulted in the development of the economy to be similar to that of 2019.

"However, there are obstacles to providing the best possible impact of this success to the people," said the President.

He said that the world has begun to sink to a state where the prices of the most essential goods and services are being negatively affected. The President said that even though the Russia-Ukraine war is taking place far from the Maldives, Maldivians are once again being affected by the conflict.

"We are also facing the same difficulties other nations are dealing with as a result of this war. It has been some months since the growth we had achieved post pandemic had met the losses we are encountering due to this war," President Solih said.

He said that one of the government's main responsibility was to ensure the nation is safe from any conflict that may be occurring on a global scale, and take Maldivians to safer waters.

"The government will continue to work towards a happy tomorrow by fulfilling our pledges to the people," said the President.

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