Maldives fuel subsidy spending projected to reach MVR 3.7 billion in 2026

The Maldives government expects fuel subsidy expenditure to reach MVR 3.7 billion by the end of 2026, significantly exceeding its original budget allocation due to rising international oil prices linked to the conflict in the Middle East.

According to figures included in the proposed 2027 national budget submitted to Parliament, the government initially estimated MVR 1.1 billion in fuel subsidy expenditure for 2026.

However, higher oil prices have pushed the revised projection to MVR 3.7 billion, representing an increase of approximately MVR 2.6 billion over the original allocation.

The budget documents indicate that the government expects global oil prices to decline to some extent in 2027, although prices are not projected to return to levels recorded before the conflict.

As a result, the government has projected MVR 3.2 billion in fuel subsidy expenditure for 2027, approximately MVR 550 million less than the amount expected to be spent this year.

The proposed 2027 budget also outlines plans to reduce expenditure on imported fuel by expanding renewable energy generation.

Under the initiative, the government plans to launch a 150-megawatt solar energy project across the islands in 2027.

The project will include arrangements for installing solar panels on residential properties and purchasing the electricity generated by households.

According to the budget documents, the initiative is expected to reduce the amount of fuel required for electricity generation in the atolls, thereby lowering the government's fuel expenditure.

The government also plans to implement additional projects in the Greater Malé area in 2027 to reduce fuel consumption and expenditure associated with electricity generation.

The measures form part of the government's efforts to limit the impact of international oil price fluctuations on public expenditure and reduce dependence on imported fuel.