The Maldivian government has significantly reduced its subsidy expenditure in the first half of 2025, marking a notable shift in fiscal policy aimed at reinforcing budgetary discipline. According to the latest Weekly Fiscal Development bulletin released by the Ministry of Finance and Planning, subsidy allocations dropped by 19 percent compared to the same period last year.
Between January and July 17, 2025, the state spent approximately USD 103.78 million on subsidies, a substantial decrease from the USD 136.23 million recorded over the same 26-week period in 2024. Despite the reduction, subsidies continued to represent the largest component within the government’s broader “grants and contributions” category, which saw an overall expenditure of USD 317.82 million—down from USD 337.19 million last year.
The reallocation of spending appears to be part of a strategic recalibration of public finances, contributing to a positive fiscal balance. The government reported total expenditure of USD 1.26 billion for the period, while cumulative revenue—including foreign aid—reached USD 1.33 billion, exceeding both last year’s figures and current expenditure.
While subsidy spending fell, other sectors experienced increases. Notably, the Aasandha national health insurance scheme received USD 64.86 million—representing a 9.9 percent year-on-year rise—demonstrating the government’s continued emphasis on improving public healthcare access.
Conversely, grants allocated to local councils declined to USD 64.86 million from USD 77.83 million the previous year, signaling a tighter approach to decentralised funding.
The bulletin highlights the government’s effort to maintain fiscal discipline amid evolving economic priorities. The reduction in subsidies aligns with broader goals to streamline public spending and invest in areas delivering long-term returns, such as healthcare and infrastructure.
The Ministry of Finance and Planning continues to monitor fiscal indicators closely, with expectations that refined policy measures will support sustained economic growth and fiscal resilience in the coming quarters.
