Inflation may rise 3.9 percent with subsidy reforms

Ministry of Finance projects a rise in inflation following the subsidy reforms which will be implemented next April.

As per the proposed budget for 2025, inflation will be at 3.9 percent. Finance Ministry said that this rise is projected to come with the subsidy policy changes, adding that it may be extended to a year.

IMF, meanwhile, predicts lower prices in the medium term in the global market. Based on this, Finance Ministry projects that the inflation raise rate will also be slower in the medium term.

This year, inflation in Maldives is at 0.8 percent, with the figure at 2.9 percent last year.

Inflation rate in Maldives is usually low due to subsidies and price control on many products and services. Even in the case of electricity, the subsidies provided prevent the global changes in fuel prices being reflected in electricity charges.

The government plans to offer targeted subsidies in four areas from next April: fuel, staples, electricity and sewerage. With this change, subsidies in these areas will then be provided to those most in need.

The proposed budget for 2025 has an allocation of MVR 900 million for subsidies.