The Maldives closed 2025 with a narrower fiscal deficit, driven by stronger revenue performance and slower capital expenditure, according to the latest Weekly Fiscal Developments report released by the Ministry of Finance and Planning.
Cumulative revenue and grants for the year reached MVR 39.6 billion, broadly in line with projections, while total expenditure stood at MVR 43.1 billion. This resulted in an overall deficit of MVR 3.5 billion, a marked improvement compared to the deficit recorded at the same point in 2024. The primary balance, which excludes financing and interest costs, posted a surplus of MVR 1.2 billion, reflecting tighter control over spending relative to income.
Tax revenue remained the backbone of government income, accounting for more than four fifths of total revenue. Goods and Services Tax was the single largest contributor, with Tourism GST generating MVR 11.0 billion over the year, underscoring the continued reliance on the tourism sector for fiscal stability. Non tax revenues also exceeded expectations, reaching MVR 10.0 billion, supported by higher fees and charges, property income, and airport related levies. In contrast, grant inflows declined sharply compared to previous years, reinforcing the government’s dependence on domestic revenue sources.
On the expenditure side, recurrent spending absorbed the bulk of outlays, totalling MVR 36.3 billion. Salaries, wages and pensions accounted for MVR 14.7 billion, while administrative and operational expenses rose to MVR 21.6 billion, indicating persistent structural pressures in day to day government spending. Transfers, subsidies and social welfare programmes, including Aasandha and council grants, continued to represent a significant share of recurrent expenditure.
Capital expenditure remained notably subdued at MVR 6.8 billion, well below approved levels. Spending on infrastructure assets, including roads, bridges and airports, formed the largest component, but overall capital execution lagged behind earlier projections. This pattern mirrors trends seen throughout the year, where ambitious investment plans were met with slower implementation, contributing to the narrower deficit but raising questions about project delivery and long term development momentum.
Public sector investment expenditure totalled MVR 8.7 billion, with transport projects dominating allocations, particularly airport development. Spending on housing, environmental protection, and land reclamation was lower than approved amounts, continuing a trend of underutilisation in capital intensive sectors.
Despite the improved fiscal balance, financing pressures remain evident. Loan repayments climbed to MVR 5.2 billion during the year, while transfers to the Sovereign Development Fund increased to MVR 2.7 billion. Outstanding government securities stood at MVR 99.6 billion by the end of December, reflecting sustained reliance on domestic and external borrowing to meet financing needs.
Overall, the 2025 fiscal outcome points to improved short term balance driven by strong tourism linked revenues and restrained capital spending. However, the combination of high recurrent expenditure, declining grant support, and persistent borrowing highlights the underlying challenges facing fiscal sustainability in the years ahead.
