The government has postponed implementing targeted subsidies to next year.
The government has postponed implementing targeted subsidies to next year.
The Ministry of Finance said they are finalizing the software needed for subsidy reform and collecting the necessary information.
The ministry said that due to technical aspects related to the software, according to current plans, this can now only be implemented next year. The Finance Ministry said the subsidy reform is delayed in order to plan it as well as possible and identify those most in need.
MVR 600 million was allocated in this year's budget for subsidy reform as well. It was previously decided to implement it starting from July this year. However, the Finance Ministry said it could not be done that month because the required plans could not be formulated.
This year's State budget stipulated changing subsidies for electricity, fuel, staple foods, and sewerage services to a direct transfer system. With that, it was stated in the budget that subsidy expenditure could be reduced by MVR 2.5 billion. However, that cannot be achieved now.
When subsidies start being given to those most in need, 60 percent of the population will benefit. Subsidy assistance will be stopped for the 40 percent of households with the highest incomes. The Finance Ministry has said they will publicize how this will be done in the coming days.
Over the past five years, the government has allocated MVR 32 billion from the State budget for subsidies. In 2018, subsidy expenditures amounted to MVR 3.4 billion, but by last year, that figure had risen to MVR 10 billion.
The IMF and World Bank have repeatedly advised reforming subsidies, stating that spending on them is unsustainable and should be reduced.
Sign In
