Zuhoor: International pressure to cut subsidies

Chairperson of Economic Council of Maldives, Minister for President’s Office, Ahmed Zuhoor has said that the government had revised subsidy policy and decided to provide subsidy from staple goods only to those living in poverty, in face of immense pressure from international financial institutions.

Speaking during the press conference held by Economic Council regarding the decision this Saturday at President’s Office, Zuhoor stressed that the government had not cancelled subsidies on staple goods.

“There are still levels of subsidies on rice, sugar and flour from STO. But we have removed some levels of subsidies,” said Zuhoor.

Zuhoor said that the government changed its subsidy policy after facing difficulties in securing loans and assistance from international financial institutions. He said that the government could not forever turn away from what they were offering.

“The loans we need for development; we have to take from international financial institutions.

We can only run our projects when international parties finance them. But they don’t want to finance the projects because everything here is subsidized,” said Zuhoor.

He said that financial institutions had expressed most concern over subsidization of electricity and staple goods.

Zuhoor said that everything up until now had been subsidized, and that the income received by people were “spent on our pleasure.”

He said that Maldives would be able to secure foreign investment only if it listened to what the foreign parties had to say and made concessions.

Zuhoor said that the policy change meant that the subsidies would now go to “those who are most deserving,” adding that it wasn’t financially feasible for the State to cover such a large amount in subsidies over such a long time.

Subsidies from staple goods will, hereafter, be provided only to people living in poverty – pushing the price of staple goods up by 100 percent.

National Social Protection Agency (NSPA) will be providing MVR 40 per person per month in subsidies, and MVR 240 per month as subsidies to households.