Subsidy spending rises 86% to MVR 3.1 billion, finance ministry reports

Government spending on subsidies increased by 86 per cent during the first half of the year, reaching MVR 3.1 billion, according to the Ministry of Finance's latest Weekly Fiscal Developments report.

The report, which covers the fiscal position as of 16 July, attributes the increase mainly to higher spending on fuel and electricity subsidies.

According to the report, total revenue and grants reached MVR 23 billion, an increase of MVR 1.9 billion, or nine per cent, compared with MVR 21.1 billion during the same period last year.

Total expenditure stood at MVR 24.5 billion, up MVR 4.2 billion, or 21 per cent, from MVR 20.3 billion a year earlier.

Recurrent expenditure increased by 20.8 per cent to MVR 21.4 billion, reflecting higher subsidy costs and increased public sector wages under the government's pay harmonisation programme.

Capital expenditure rose by 22.1 per cent to MVR 3.2 billion.

The report shows that total subsidy expenditure increased from MVR 1.7 billion during the same period last year to MVR 3.1 billion this year.

Fuel subsidies accounted for the largest share of the increase, rising from MVR 702.1 million to MVR 1.8 billion.

Electricity subsidies increased from MVR 341.3 million to MVR 626.7 million.

Spending on waste management subsidies also rose to MVR 626.7 million, while transport subsidies increased from MVR 128.5 million to MVR 201.6 million.

Food subsidies increased from MVR 199.4 million to MVR 243.9 million.

In contrast, fisheries subsidies declined from MVR 207.4 million to MVR 83.1 million, while sewerage subsidies remained unchanged at MVR 67.8 million.

According to the Ministry of Finance, higher fuel and electricity subsidy expenditure reflects the government's efforts to limit the impact of higher global energy prices on domestic consumers.