The Government of Maldives is absorbing the financial impact of rising global oil prices through its subsidy system to protect households and businesses from sharper increases in fuel-related costs, Minister of Finance and Public Enterprises Hassan Zareer has said.
Speaking during the 10th episode of the Ahaa forum, jointly organised by the President’s Office and Public Service Media, Minister Zareer said fuel subsidies continue to account for a substantial share of overall subsidy expenditure and have contributed to pressure on the national budget.
He explained that global oil prices rose significantly following the conflict that began in the Middle East in March this year, with changes in oil prices, logistics and international travel creating wider economic effects for the Maldives.
According to the Minister, the Government has made considerable efforts to maintain stability in domestic fuel prices and reduce the impact of external cost increases on the public. He said the subsidy system has been used as an important mechanism to ease the financial burden on consumers and support price stability during a period of heightened global uncertainty.
The national budget had initially allocated USD 188 million for subsidies this year. However, an additional USD 91 million has since been spent, bringing total subsidy expenditure so far to USD 279 million.
Minister Zareer said the higher expenditure reflects the Government’s decision to prioritise public welfare while responding to changing global economic conditions. At the same time, the administration remains focused on maintaining fiscal discipline and managing the overall budget responsibly.
Despite the additional subsidy burden, the Government aims to keep the overall budget deficit within single digits as a percentage of gross domestic product. The Minister also said the Government intends to achieve this without introducing a supplementary budget, following a similar approach taken last year.
He added that the Government’s efforts to strengthen the Maldives’ broader economic and fiscal position have received recognition from international financial institutions and credit rating agencies, reflecting growing confidence in the country’s economic management.
The Government continues to balance public support measures with fiscal reforms as it works to protect the economy from external shocks while maintaining stability for households, businesses and key sectors across the Maldives.
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