"Subsidy costs should be reduced"

The government will focus on reducing the expenditure on subsidies next year and managing the expenditure, the Parliament's Budget Committee Chair MP Mohamed Nashiz has said.

In an exclusive interview with AVAS, Kinbidhoo MP Nashiz, who is also the Chair of the Public Finance Committee, said the government has plans to reduce the expenditure on subsidies and will work on it next year.

Among the subsidies, Nashiz highlighted the expenditure incurred for Aasandha and NSPA.

Nashiz said the government has decided to buy medicines in bulk next year to reduce the cost of subsidies. As these include medicines and other medical supplies, the government's decision will reduce some of the subsidy costs, he said.

He said another way to reduce the subsidy would be to create a competitive environment where interested parties have the opportunity to participate in the tenders to purchase medicine. This will greatly reduce the cost of purchasing medicines and medical supplies, he said.

"The current system is one where there are specific ways to purchase specific products. With this system, sometimes, only one party has the required item. By the time it reaches the health service providers in the Maldives, the cost of the item is three or four times higher," Nashiz said.

Nashiz noted that due to the current procedures followed in purchasing medical equipment and medicines, a joint surgery pin available in the Maldives is several times more expensive than in the United States. There is a vast price difference between the price of a Panadol pill in India or Sri Lanka and the price of the same pill in the Maldives, he said.

Nashiz also noted that some people take a huge amount of money as corruption in the purchase of medicines and medical supplies. Nashiz said if the bulk procurement process is implemented, the process will save a lot of money for the state budget.

Speaking about subsidies for oil, staple foods, fishers, and subsidies to various sectors, Nashiz said some of these subsidies go to people who do not need them. Nashiz said the allocation of subsidies to those especially in need should be accelerated. If subsidies are given to those who need them, those who do not need them will be prevented from benefiting from it, he said.

"The current system makes the fuel subsidy available to everyone in the country. Instead, the fuel subsidy should be targeted at those who need it and those who have low income and cannot afford it or those who earn below a certain income," Nashiz said.

Noting that subsidies are available to people with incomes below a certain threshold in other countries in the world, Nashiz said if the Maldives followed the same process, the state would save a lot on expenditure. Nashiz said while there are many ways to manage the cost of subsidies, he does not know the government's exact plan to reduce expenditures related to subsidies.

Further noting that MVR 180 million has been allocated for water and sewerage subsidies in next year's budget, Nashiz said if a service is provided, some expense has to be incurred. Therefore, the subsidy is given to the service providers so that the people do not have to bear the cost, and does not cause loss to the service providers, he explained.

Nashiz said although residents are billed for water, they are not billed for sewerage services on any island. However, there are frequent problems with junctions, which need constant fixing and repair. While these repairs are usually expensive whether it is done by MWSE or FENAKA Corporation, the water and sewerage subsidy is given by the government to compensate the companies that provide the services, he said.