Government spending on subsidies has risen to MVR 3.13 billion this year, an increase of about 86 per cent compared with the same period in 2025, with fuel and electricity accounting for the largest share of the increase.

The latest Weekly Fiscal Developments Report published by the Ministry of Finance and Public Enterprises said subsidy expenditure increased from MVR 1.7 billion in 2025 to MVR 3.13 billion this year. Subsidies are provided to keep the prices of essential goods and services below their actual cost, with the Government covering the difference between the controlled price and the cost incurred by State-owned companies. These include food, electricity, fuel used for electricity generation, and waste management.

The report said the sharp increase in subsidy expenditure was mainly driven by higher spending on fuel and electricity subsidies. Fuel subsidy spending rose from MVR 702.1 million in 2025 to MVR 1.8 billion this year, making it the largest subsidy category. The increase was attributed to higher global refined fuel prices following the conflict in the Middle East.

Electricity subsidy expenditure increased from MVR 341.3 million to MVR 626.7 million, while waste management subsidies rose from MVR 33.9 million to MVR 90.6 million.

Subsidies for transport increased from MVR 128.5 million in 2025 to MVR 201.6 million this year. Food subsidies also rose from MVR 199.4 million to MVR 243.9 million.

In contrast, fisheries subsidy expenditure declined from MVR 207.4 million to MVR 83.1 million, while sewerage service subsidies remained unchanged at MVR 67.8 million.

The figures show that fuel and electricity subsidies accounted for the largest share of total subsidy expenditure this year.