The Finance Ministry said that if these cost-cutting measures are not implemented, the state budget could increase by MVR 3 billion, pushing total expenditure from MVR 57 billion to MVR 60 billion this year.
Subsidy expenditure in the first month of this year reached approximately MVR 200 million.
According to the Finance Ministry, this represents a 300 percent rise from last year’s MVR 50 million spent on subsidies. Additionally, total spending on subsidies, grants, and Aasandha has also increased, reaching MVR 473 million, up by 19 percent from last year’s MVR 397 million.
Despite the overall rise in subsidies and grants, Aasandha expenditure has decreased. In the same period last year, MVR 110 million was spent on Aasandha, while this year’s figure stands at MVR 63 million.
The budget outlines several measures to reduce subsidies and government spending. However, President Dr Mohamed Muizzu has decided not to implement some of these measures. In December last year, he assured that subsidies, Aasandha, and pensions would not be reduced.
Proposed fiscal reforms included requiring wealthier individuals to contribute a portion of their Aasandha expenses, standardizing Aasandha deductions across hospitals, and revising medical welfare benefits provided through NSPA. The budget also suggested converting NSPA assistance for high-income individuals into interest-free loans and modifying old age allowance eligibility to those in need.
However, the government has now opted not to proceed with these changes.
The Finance Ministry said that if these cost-cutting measures are not implemented, the state budget could increase by MVR 3 billion, pushing total expenditure from MVR 57 billion to MVR 60 billion this year.
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