Subsidy budget fully exhausted; Aasandha funds rapidly depleting amid lack of reforms

The government’s budget for subsidies has already been exhausted, and the funds allocated for the Aasandha healthcare scheme are nearing depletion, all without any substantial reforms being implemented.

According to the latest Weekly Fiscal Report from the Ministry of Finance and Planning, MVR 8.611 billion was allocated for grants, contributions, and subsidies this year. However, with four months remaining in the fiscal year, MVR 6.112 billion has already been spent. That leaves just MVR 2.5 billion for the remainder of the year, to cover expenses including Aasandha, medical welfare, council grants, and other welfare-related support.

Aasandha funding close to exhaustion

Of the total allocation, MVR 1.85 billion was designated for Aasandha, the national health insurance scheme. As of now, MVR 1.32 billion has already been spent, leaving only around MVR 530 million available for the rest of the year. This means 71 percent of the Aasandha budget has already been exhausted, raising concerns over the sustainability of the program.

Despite government promises to curb Aasandha expenses, including efforts to procure quality medicines, reduce prices, and eliminate overpriced medications, progress has been minimal. So far, only the prices of 10 medicines have been officially reduced. While bulk procurement was proposed as a cost-cutting measure, the lack of implementation suggests a disconnect between policy statements and actual execution.

Subsidy budget overspent

The situation is even more concerning with subsidies. While MVR 1.859 billion was allocated for subsidies in 2024, the budget was fully exhausted by the end of July. In fact, the government has already spent MVR 2.049 billion, exceeding the allocated budget by MVR 190.3 million, funded from outside the approved allocation.

The government had earlier committed to subsidy reform as part of a broader strategy to reduce state expenditure. However, no concrete reforms have been implemented, and the finance ministry’s data shows that 10 percent of subsidy-related spending was made outside the official budget, reflecting poor fiscal discipline.

Spending breakdown on other welfare programs

Additional data from the Ministry of Finance of Planning shows:

• MVR 327.3 million was allocated for medical welfare, of which MVR 207.3 million has already been spent.
• MVR 2.146 billion was allocated for council grants, with MVR 1.436 billion utilized to date.
• For other forms of assistance, MVR 2.752 billion was budgeted, and MVR 1.098 billion has been spent.

Mounting unpaid bills

A Public Finance Committee report detailing unpaid bills from NSPA and Aasandha between November 2023 and July 2024 paints a troubling picture. The largest outstanding amount, MVR 367 million, is owed to government health service providers, followed by MVR 349 million owed to foreign hospitals.

During this same period, NSPA paid MVR 872 million in claims. However, new unpaid bills totaling MVR 663 million emerged, highlighting that expenditures are outpacing payments.

As of the report:

• MVR 330 million is owed to private clinics
• MVR 325 million to pharmacies
• MVR 164 million to hospitals in the Maldives

The backlog of unpaid bills since November 2023 reached MVR 1.1 billion, with pharmacies alone being owed MVR 516 million, the single largest liability in the Aasandha program.

With major components of the social welfare budget already depleted and no significant reforms in sight, fiscal pressure is expected to intensify in the final quarter of the year. Without swift corrective measures, the sustainability of key public services like Aasandha remains in serious jeopardy.