President announces restrictions on fuel subsidies

President Solih meets with a group of fishermen onboard their vessel in Felivaru Island | Photo: President's Office

Malé, Maldives – President Ibrahim Mohamed Solih on Tuesday announced restrictions to fuel subsidies provided by the government.

President Solih stated that the government is in the process of amending regulations to only allow fuel subsidies for the underprivileged.

Detailing that the measures taken by the government during the onset of Covid-19 will restore the Maldivian economy to pre-pandemic levels by the end of this year, the President highlighted that the impact of the global economy on a national level.

The President also stated that the economic effects of the Covid-19 pandemic and the Russia-Ukraine war were visible in the Maldives.

“While global prices for goods and fuel had risen significantly, Maldivians had not incurred the full brunt due to government intervention,” stated President Solih.

President Solih added that the expenditure on fuel has far exceeded the allocated budget. Fuel subsidies are provided by the state to two main categories; the fishery industry and the electric power industry.

The global fuel price hike has pushed the fuel expenditure to MVR 910.3 million by June 2022, while the budgeted amount for this year is MVR 341.5 million.

President Ibrahim Mohamed Solih

The government forecasts that the fuel expenditure will rise to MVR 1.95 billion by the end of 2022 without preemptive measures.

President Solih stated that the government is restructuring policy and regulation regarding fuel subsidies to a need-based structure.

Earlier this month, Fuel Supply of Maldives (FSM) restricted the fuel supply to businesses to an estimated average per month. Parent company of FSM, State Trading Organization (STO)’s MD Hussain Amr stated that this was due to MVR 1.3 billion in unpaid credit for fuel purchases.