The Government of the Maldives has allocated USD11 million in subsidies for poor households in the proposed state budget for 2023.
The government plans to provide subsidies in a sustainable manner by improving the method of providing subsidies to citizens. Cabinet ministers have discussed new policies to be implemented in the provision of subsidies.
However, the Ministry of Finance stated that the hike in global fuel prices will result in the government spending between USD38-51 million in electricity subsidies. The ministry also estimates that USD207 million will be spent on electricity subsidies this year, which is USD214 for each household every month.
The expenditure for electricity subsidies has been rising each year. The ministry has stated that subsidies are available to everyone and beneficiaries include the rich. As such, the ministry has decided to implement measures to target subsidies for those who need them. The regulations also require electricity services to be provided at the same rate in the Greater Male’ Region and the atolls, meaning that all households in the atolls receive electricity subsidies due to the lower electricity tariff rate. The electricity subsidy is separate from the fuel subsidy provided to households.
The electricity bills would be significantly higher without electricity subsidies, and the hike in global fuel prices would result in a higher monthly fuel surcharge without the subsidies. The constitution guarantees the right to electricity services for all citizens, and the administration’s policy is to maintain the price of electricity in Male’ and the atolls.