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Finance Minister warns of austerity measures coming into force this May

Finance Minister Dr Mohamed Shafeeq revealed that austerity measures would go into force beginning next month.

Hanaan Hussain
16 April 2024, MVT 11:58
Mohamed Shafeeq / Finance Minister
Hanaan Hussain
16 April 2024, MVT 11:58

Minister of Finance Dr Mohamed Shafeeq has stated that substantial fiscal reform is needed to reduce government deficit, revealing that the government would be adopting austerity measures in the upcoming month of May.

In an exclusive interview with 'Mihaaru' news last week, Minister Dr Shafeeq highlighted that priority would be given to strengthen government companies in this period and bring about positive changes with Aasandha Company Limited. The Minister added that necessary studies had been conducted, and that the government had already determined which measures would be taken in the coming days to reduce fiscal deficit.

Referring to the pharmaceutical industry and its operations in the Maldives, Finance Minister Dr Shafeeq stated efforts had been made to import pharmaceutical products to the country in bulk.

"We have asserted on multiple occasions that pharmaceutical drugs brought into Maldives must be of good quality. It is very important to get quality drugs at a cheaper price," said Minister Dr Shafeeq.

The Minister also noted that targeting subsidies are part of the fiscal policy reforms being pursued by the government to reduce expenditure throughout the year. Minister Dr Shafeeq revealed that these measures would be coming into force from June 2023.

The government of Maldives has allocated MVR 600 million to issue subsidies to parties who are most in need of them. According to the state budget, subsidies being issued for electricity, oil, food staples and sewerage services will be issued through a direct transfer system in the future. It is estimated that this will reduce government expenditure on subsidies by MVR 2.5 billion.

Alluding to the major fiscal policy reforms looming ahead, Minister Dr Shafeeq reassured that the changes would be implemented in stages to allow smooth transitioning and to avoid causing inconvenience to the people.

Minister Dr Shafeeq stated that the government had also determined which measures to pursue with regards to various issues within state-owned enterprises, adding that separate matters in different companies were now being investigated. The Minister warned that the austerity measures ahead could force some state-owned enterprises to merge in order to achieve efficiency and cut down costs.