Efforts are underway to begin reducing expenditure in July, the new Finance Minister Dr. Mohamed Shafeeq has said.
Speaking about the budget in parliament, the minister said costs were estimated to account for MVR 47.3 billion out of the MVR 49.6 billion budget proposed for next year.
The most important step for reducing costs was changing policies, the minister noted.
While government spending and the required level of financing have to be reduced in order to achieve fiscal and debt sustainability, the minister said it was important to change policies and implement the changes.
The minister proposed three policies for cutting costs:
- Changing indirect subsidies to direct subsidies for those most in need
- Reviewing the Aasandha scheme
- Strengthening the government's welfare assistance mechanism.
The three policies were formulated in light of research conducted by international financial institutions such as the World Bank and IMF, he said.
"What we're working on now is tying the budget's financing plan to projects. The deficit in the 2024 budget will be MVR 13.8 billion. This is a deficit of 12 percent of GDP," the finance minister said.
Preparations are ongoing to start implementing the policies next July, he said, stressing the need for making the changes in order to achieve significant reductions in state expenditure.
"The biggest priority in the coming years should be improving the state's finances and ensuring fiscal and debt sustainability. If the [policies] in the proposed budget could be implemented, we can set the direction straight towards this goal," Dr. Shafeeq said.
Desired changes could not be brought about with only budget control and no policy reforms, the minister said.
