MVA Urges Shift to Targeted Electricity Subsidy System to Cut Costs

The Maldives Monetary Authority (MVA) has submitted recommendations to the Parliament's Budget Study Committee, emphasizing the need to transition to a targeted subsidy system to reduce expenditure on electricity subsidies. MVA Managing Director Mariyam Rashfa stated that while oil and electricity subsidy costs are projected to decrease next year, the escalating situation in the Middle East poses a risk of further oil price increases, which could raise the burden on the country's official reserves and financial aid. Rashfa noted that reforming the current subsidy policy is crucial, as the subsidy budget for this year was exceeded, with 4.3 billion Maldivian Rufiyaa spent against a budgeted 2.89 billion. Finance Minister Hassan Zareer had previously stated that fuel subsidies are expected to reach 3.8 billion by year-end, though projections suggest a drop to 3.2 billion next year. The MVA's recommendation aligns with past calls from both internal and external institutions to make the subsidy system more sustainable.