MVR 4.2 bln spent on subsidies in three years

The state has spent over MVR 4.2 billion on subsidies in the past three years.

Finance Minister Ibrahim Ameer sent a written response to the Parliament answering inquiries by Maafannu Central MP Ibrahim Rasheed. In his response, the minister provided details on the state's spending over the past three years. He provided the figures for the government's spending on subsidies and assistance to facilitate electricity and water price reductions, food price reductions, and running preschools.

Total subsidy:

2019 - MVR 1.30 billion
2020 - MVR 1.26 billion
2021 - MVR 1.59 million

Subsidies amounted to MVR 491 million in 2019, MVR 160 million in 2020, and MVR 99 million last year. Fuel subsidy costs for 2019 and 2020 are included in these figures. The transport subsidy before 2022 is also included in these numbers.

Electricity subsidy:

2019 - MVR 491 million
2020 - MVR 160 million
2021 - MVR 99 million

The minister said the government spent MVR 40 million last year to reduce water prices. While MVR 321 million was spent on food price reduction in 2019, MVR 422 million was spent in 2020, and MVR 238 million in 2021.

In addition, MVR 21 million was spent to run pre-schools in 2019, MVR 19 million in 2020, and MVR 20 million last year.

The Finance Minister said the expenditure on fuel subsidy for 2019 and 2020 is included under Budget Code 228001 Subsidy. However, before this year, the code included transport subsidy, he noted, adding that a separate budget code will be made this year for transport subsidy as the expenditure on transport subsidy is increasing.

According to the minister, MVR 460 million was spent on fuel subsidies last year.

The minister said all subsidies currently provided by the government except for a minimal amount [0.1 percent] for food items are indirect subsidies to the supplier of goods or services. Therefore, the subsidy is available to everyone instead of being given only to the poor, he said. Currently, the beneficiaries of the subsidy include the rich, foreigners, and tourists, he said. The subsidy given to businesses is also given equally to all eligible businesses, he said.

The minister said subsidy is provided by the National Social Protection Agency (NSPA) to provide staple food to poor families. Families with incomes below the poverty line are eligible for the subsidy, and such families must seek the subsidy themselves, the minister said.