Statistics show that 99 percent of the funds allocated for subsidies in this year’s state budget have been exhausted before any reform attempts, and with five months left in the year.
The delays in reforming subsidies and Aasandha as planned by the current administration, coupled with rising expenses for both, have been strongly criticized by the public.
Finance Ministry has publicized the details of the government’s income and expenditure as of August 7th.
According to the statistics, the majority of funds allocated for subsidies has been exhausted with about five months remaining the year, including the remainder of this month.
In this regard, MVR 1,836.4 million out of the MVR 1,859.6 million allocated for subsidies has been exhausted, accounting for 99 percent.
A total of MVR 2,469 million was spent on subsidies during the same period last year. Despite almost exhausted of funds allocated for subsidies, spending on subsidies have been reduced by some MVR 650 million this year.
A smaller amount was allocated for the subsidies in the state budget this year in order to reform subsidies, to pave way for the allocation of subsidies for those most in need. The funds allocated subsidies have been almost completely exhausted because of the government’s failure to implement the reforms eight months into the year.
Maldives is heavily reliant on subsidies for essential needs such as electricity and staple foods, racking up huge expenses. However, international financial institutions have urged to reform subsidies to award them to those most in need: something the government has failed to do to date.
According to Finance Ministry’s statistics, the government’s spending so far this year stands at MVR 22.3 billion. The spending is lower than the income which stands at MVR 23.7 billion.
While the Ministry emphasized the surplus in the budget, the government has yet to settle billions owed to suppliers and private companies for various projects.
Other notable statistics:
No reduction in expenses incurred for salaries with total spending at MVR 8.4 billion
MVR 4.2 billion reduction in spending on projects due to stalled projects
Decrease in import duty and business profit tax due to law economy
Received only 6.6 percent of fund projected as foreign aid
Notably, Maldives foreign debt obligations remain extremely high with USD 600 million — roughly MVR 9.25 billion — in debt is due this year alone. Looking ahead, another USD 1 billion, about MVR 15.42 billion, is scheduled for repayment next year. 
Subsequently, international credit ranking agencies including Finch and Moody’s have lowered Maldives’ credit ranking.
With foreign debt obligations looming, the government has government introduced new foreign exchange laws and regulations seeking to address the USD crunch in the Maldives and inject more foreign currency into the banking system.
The Foreign Currency Act, which took effect at the start of this year, requires resorts to exchange either exchange USD 500 per tourist or 20 percent of the monthly revenue, and guesthouses to exchange USD 25 per tourist or 20 percent of the monthly revenue with local banks.
And under the regulation formulated under the Act, banks are now required to sell 90 percent of the USD that businesses exchange with them under the Act to central bank, Maldives Monetary Authority (MMA), on a weekly basis, up from the original 60 percent.
MMA said that it has been selling back this additional 30 percent to banks on a weekly basis.
Despite this, the value of Maldivian Rufiyaa continues to drop, with USD exchange rate currently above MVR 20 in the black market.
Nevertheless, the government has reaffirmed its ability to honor the Maldives’ debt obligation on multiple occasions.