Fiscal costs and challenges of social protection and subsidies : the case of the Maldives

Abstract

This paper examines the various social protection programs and subsidies in place in the Maldives focusing on four major components: electricity subsidies, health insurance, pensions and food subsidies. Simple analyses have been used to analyse the fiscal costs incurred by the government from these social protection and subsidy schemes with a particular emphasis on explaining the factors that have led to a significant rise in expenditure by the government in recent years. Building on these, the paper brings to light crucial issues within the existing framework of social protection and subsidy schemes that pose large risks to fiscal sustainability in the future.