As of September 9, the Maldives has recorded a 15.5 percent decrease in state expenditure compared to the same period last year. According to the Finance Ministry’s Weekly Fiscal Development Report, MVR 25.4 billion has been disbursed from the State Budget so far this year. The sharp decline is primarily driven by reduced spending on development projects, also known as capital expenditure, which fell by 57.7 percent.
Recurrent Expenditure Sees Moderate Reduction
Recurrent expenditure, which covers administrative operations of state offices, accounts for 57.7 percent of total spending. This category also experienced a year-on-year decrease of 4.5 percent, largely due to lower expenses on procurement and repair works.
Breaking it down further:
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Procurement costs fell by 15.5 percent
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Repair and maintenance expenses declined by 15.6 percent
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Transport-related spending dropped by 5.8 percent
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Government aid and subsidies decreased by 7 percent
The reduction reflects a more cautious approach in operational spending across government departments.
Capital Expenditure and Infrastructure Projects
Capital expenditure reached MVR 3.3 billion by the end of last week. Out of this, MVR 2.9 billion has been spent on infrastructure, including bridges, roads, and airport development projects.
The Public Sector Investment Program (PSIP), initially allocated MVR 12.4 billion in this year’s budget, has so far seen only MVR 4.1 billion spent. Unlike last year, when major allocations went to land reclamation and road development, this year the PSIP budget prioritized harbors and docking facilities, with MVR 2.6 billion spent to date. Housing projects, however, have seen limited progress, with only MVR 131.6 million disbursed.
Despite the slowdown in spending, the state maintains an overall budget surplus of MVR 868.7 million.
Government Revenue Increases to MVR 26.3 Billion
Revenue collection, including free aid, reached MVR 26.3 billion, marking a 7.8 percent increase from the previous year. Tax revenues accounted for MVR 20.5 billion, or 78 percent of total revenue collected during this period.
Several factors contributed to revenue growth:
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Green tax surged 104.6 percent following rate adjustments
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Departure tax rose 57.9 percent
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Income tax increased by 17.3 percent
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Airport Development Fee climbed 56.8 percent, reflecting a 9.7 percent rise in tourist arrivals, with over 1.5 million visitors welcomed so far this year
Other revenue sources, including land acquisition and conversion fees, lease extensions, and resort rents, also saw increases, pushing total revenue and aid up by roughly 8 percent compared to last year.
The combination of slower capital spending and increased revenue indicates a cautious but balanced fiscal approach. While infrastructure projects have been delayed or reprioritized, robust tax collection and tourism growth are helping maintain a budget surplus. Policymakers will likely continue to monitor development spending closely to ensure long-term fiscal sustainability.
