The Edition


Maldives defends subsidy cut off, says necessary for foreign aid

Mohamed Visham
02 October 2016, MVT 10:44
Minister at the President's Office and national economic council chair Ahmed Zuhoor (R) speaks during the press conference on Saturday. PHOTO/PRESIDENT'S OFFICE
Mohamed Visham
02 October 2016, MVT 10:44

Government on Saturday defended the move to cut down on subsidies by insisting that the decision was prompted to secure foreign aid.

The government, the day before, revised its current policy on staple food subsidy to limit it to just the needy. I an attempt to explain the decision following a public outcry, minister at the president's office and chair of the national economic council Ahmed Zuhoor during a sudden press conference said international financial institutions have long pressed the government to cut off subsidies.

The continued subsidies have hindered the government from securing foreign loans for much needed development projects, Zuhoor explained.

"Electricity, health care and food are subsidized by the government. Harbours, sanitation and other development projects are also carried out under government subsidy. As we can't continue turn a deaf ear to demands of foreign financial institutions, we are limiting the subsidy on electricity and staple food," he said.

Zuhoor also noted that previous governments had also mulled on the decision to limit subsidies but did not have the courage to do so.

"Such things are directly linked to the public. So the outrage is understandable. This is not something we also wanted to do. But these are the difficult decision governments need to make," Zuhoor stressed.

Highlighting that the government was only limiting the food subsidy, Zuhoor said the needy would still be afforded relief.

According the revised policy the subsidy would now be made available to the needy through the national social protection agency with effect from October 1.

The change would lead to a significant hike in prices for rice, flour and sugar in the archipelago.

Zuhoor also reiterated that 60 percent of the MVR300 million spent on subsidizing staple food per month is used is used up by expatriate workers who make a significant portion of the population.

"With these changes expatriates living in the Maldives and Tourists visiting the country would no longer receive subsidy benefits and subsidy benefits will be applied equally across the nation," he added.

The decision to cut off food subsidy comes in the wake of the public having been forced to pay more for electricity.

Maldives’ state electric company has announced a decision to charge four laari from each unit of electricity from this month resulting in the hike of electricity rates in the archipelago.

The fuel surcharge applicable from September 19 was prompted by the rising diesel prices, according to State Electric Company (STELCO).

Minister Zuhoor stated that such measure were vital for robust economic growth in a time when the Maldives was set to forgo foreign aid; having advanced from its previous least developed country status.