By the end of July, the government had exhausted its subsidy budget and overspent by over MVR 200 million. According to the latest data from the Ministry of Finance, a total of MVR 3.13 billion has been spent on subsidies up to Thursday, which is MVR 240 million more than the MVR 2.89 billion allocated in this year’s budget.

The overspending was driven by higher-than-expected costs for oil and electricity subsidies following the Iran war. However, the ministry’s reports do not provide a detailed breakdown of subsidy categories. This lack of transparency has been an ongoing issue, as governments have continued to divert funds from other budget areas to cover subsidy overruns, often due to the failure to implement policies aimed at reducing subsidy waste.

Both past and current administrations have planned to target subsidies only at those in need, but these policies have not been put into practice. The government also included subsidy targeting and reforms to the Aasandha scheme as part of a plan to save over MVR 7 billion. Earlier this year, President Muizzu announced that he would not proceed with these reforms.

The Asian Development Bank has recently advised Maldives and other Asian nations to cut subsidy costs, as these subsidies continue to strain national finances.

The Weekly Fiscal Developments report as of July 16, 2026, indicates that subsidies have experienced one of the largest increases in recurrent expenditure this year. The report shows MVR 3.13 billion spent on subsidies, compared to an allocated amount of MVR 2.89 billion. This overspend is reflected in the ministry’s figures, which list subsidies under recurrent expenditure at MVR 3,129.9 million for 2026, versus the MVR 2,890.0 million approved.

The data reveals that oil subsidies increased from MVR 341.3 million in 2025 to MVR 626.7 million in 2026. Electricity subsidies rose from MVR 33.9 million to MVR 90.6 million. Food subsidies grew from MVR 128.5 million to MVR 201.6 million. Cargo subsidies went up from MVR 199.4 million to MVR 243.9 million, while fisheries subsidies decreased from MVR 207.4 million to MVR 83.1 million. Subsidies for health services for the poor remained steady at MVR 67.8 million.

Additionally, council block grants and subsidies together make up a significant portion of recurrent expenditure. Council grants reached MVR 1,457.6 million this year, up from MVR 1,257.1 million in 2025.

As of July 16, 2026, the government’s total expenditure stood at MVR 24.5 billion, compared to MVR 20.3 billion during the same period last year. The overall budget shows a deficit of MVR 1.5 billion, although the primary balance remains in surplus at MVR 1.2 billion.