Subsidy spending rises to MVR 3.13 billion, with fuel and electricity price controls the biggest cost

Government subsidy spending reached MVR 3.13 billion in the year to July 16, 2026, up about 86 percent from MVR 1.7 billion in the same period last year, according to the Ministry of Finance and Public Enterprises' latest Weekly Fiscal Developments report.

The ministry said the increase was driven mainly by higher spending on fuel and electricity subsidies.

How subsidies work

The government controls the prices of certain essential goods and services so they cost less for the public than it costs to provide them. These include staple foods, electricity, fuel for generating electricity, and waste management. State-owned enterprises deliver these goods and services, and the government covers the difference between the controlled price and the actual cost through the state budget.

Fuel subsidy nearly triples

Fuel subsidy spending rose from MVR 702.1 million in 2025 to MVR 1.8 billion in 2026, the largest single subsidy expense this year. The ministry attributed the rise to a sharp increase in global refined fuel prices, linked to the war in the Middle East.

Electricity subsidy spending rose from MVR 341.3 million to MVR 626.7 million. Together, fuel and electricity subsidies constituted the largest share of total subsidy spending in 2026, according to the ministry's figures.

Waste management subsidies increased from MVR 33.9 million to MVR 90.6 million.

Transport and food subsidies also grow

Transport subsidy spending rose from MVR 128.5 million in 2025 to MVR 201.6 million in 2026. Food subsidy spending rose from MVR 199.4 million to MVR 243.9 million.

Not every category increased. Fisheries subsidy spending fell from MVR 207.4 million to MVR 83.1 million. Sewerage subsidy spending held steady at MVR 67.8 million.