President announces restrictions on fuel subsidies

A petrol pump attendant fills a vehicle’s gas tank; fuel demand surges and lack of proper availability forces government to take measures to ensure uniformed availability

President Ibrahim Mohamed Solih on Tuesday, July 26 announced restrictions to fuel subsidies provided by the government.

Subsidies will only be provided to the necessary parties, and not be available to all, President Solih revealed noting that the government is working on amending regulations to allow fuel subsidies in a need-based structure.

The president made the remarks during his address to the nation on the occasion of the country’s 58th Independence Day on July 26, 2022.

President Solih added that despite the challenges faced by the Maldivian economy from the COVID-19 pandemic and the Russia-Ukraine war, measures were in place to recover the economy to pre-pandemic levels. However, he noted that the crises continues to impact the country, and the government’s priority is to keep the country safe from the conflict.

He noted that the country was not experiencing the brunt of the fuel spike because of the government’s subsidies.

President Solih noted that the expenditure on fuel has far exceeded the allocated budget. 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.

“It is estimated that Maldives will spend 1.95 billion on oil subsidies by the end of the year.” He added.

The two main categories for fuel subsidies in the Maldives is the fisheries industry and the electricity sector.

Earlier in July, Fuel Supply of Maldives (FSM) restricted the fuel supply to businesses due to a MVR 1.3 billion in unpaid credit for fuel purchases, according to its parent company State Trading Organization (STO).