Finance Minister advises to cut down expenditure as much as possible

Finance Minister Dr. Mohamed Shafeeg addresses the parliament on November 22, 2023. (Photo/People's Majlis)

Finance Minister Dr. Mohamed Shafeeg, on Wednesday, has urged government offices and institutions to cut down expenditure as much as possible in light of the current state of the economy.

The new administration must earn USD 200 million during the remainder of this year. However, there are difficulties in managing the economy. The government needs to earn USD 500 million as per the proposed state budget for next year. Failure to achieve this will force the government to further cut down expenditure.

Finance Minister Shafeeg attended Wednesday’s parliamentary sitting regarding the state budget proposed for next year.

Speaking at the sitting, Minister Shafeeg said MVR 1.3 billion was forecasted in the budget to be received in grant aid, inclusive of USD 50 million. He described this inclusion as an additional risk to the budget.

“We are working with this as a goal, to secure this much in grant aid,” he added.

Finance Minister Dr. Mohamed Shafeeg addresses the parliament on November 22, 2023. (Photo/People's Majlis)

Minister Shafeeg also stressed that changes needed to be made to policies included in the budget to cut down expenditure, adding it would be not possible to retain funds required by budgetary controls without such measures.

“I advise all government institutions to go about their works in the coming days by reducing their expenditure as much as possible,” he said.

Speaking further, Minister Shafeeg, underscoring all projects of the new administration have not been included in next year’s budget, MVR 1.5 billion has been allocated for 458 projects of the highest priority. He said the new administration can commence their projects from these funds.

“The aim is to continue the projects already underway and finish them. Nevertheless, I note that there are obstructions to manage the state’s cashflow for next year in the remaining one and half months of this year,” he said.

Minister Shafeeg cited the biggest obstruction to implementing next year’s budget as the possibility of not securing the funds in grant aid. However, he detailed that the new administration has commenced efforts in this trajectory.

He added that the administration was also working on formulating an alternative plan in case they fail to secure the estimated funds in grant aid.

Finance Minister Dr. Mohamed Shafeeg at the parliament on November 22, 2023. (Photo/People's Majlis)

“The next course of action, if grant aid is not secured, is to manage by further cutting down expenditure,” he added.

The former administration’s Finance Ministry submitted an MVR 49.5 billion budget for 2024 on October 30th; MVR 46.3 billion for expenditure and MVT 2.2 billion to repay state debt.

Policies proposed to cut down expenditure next year includes reverting electricity, fuel, staple foods and sewerage service available to the public to target subsidies based on income and standard of living instead of target subsidies. It also includes reverting Aasandha expenditure to a targeted system and the bulk procurement of medical consumables.