The Finance Ministry has said that this year's budget could increase to MVR 58 billion without implementing austerity measures.
The Finance Ministry made the announcement in a presentation to the Parliament's Public Accounts Committee while discussing the state's fiscal and debt policy.
According to the Finance Ministry, the approved budget for this year will reach MVR 57.3 billion if cost-cutting measures are not implemented. That is MVR 7.4 billion more than the approved MVR 49.9 billion.
The areas where the finance ministry expects to spend more than budgeted include PSIP, indirect subsidies and debt repayment. This was seen in the past two or three years as well.
Areas which could have spending in excess of the budget
- PSIP - MVR 3.2 billion
- Indirect subsidy - MVR 3 billion
- Debt repayment - MVR 1.4 billion
The Finance Ministry raised a few issues connected to the state's financial situation. These include spending more than the revenue, delays in implementing reforms, issues with government companies and spending more than budgeted on projects.
The government now plans to implement cost-cutting policies starting in October.
The changes include making the Aasandha health insurance scheme and universal subsidies available to only those who need them. It also includes restructuring the government's PSIP, reforming companies, suspending the running cost of offices and recruitment of additional employees.
The Finance Ministry said the budget for this year can be reduced by MVR 1.7 billion when the cost-cutting measures are implemented ensuring the total expenditure remains at MVR 48.2 billion.
