The Maldivian Parliament has approved a state budget of MVR 56.6 billion for 2025, despite criticism over the lack of specifics on spending allocations and growing concerns about the nation’s mounting debt. The budget, which does not include detailed project allocations, passed with a majority vote of 70-11 after recommendations for greater transparency were excluded.
A Controversial Budget Approval
Finance Minister Moosa Zameer presented the budget on October 31. Unlike previous years, this budget lacks specifics about government-funded projects, prompting concerns from the main opposition Maldivian Democratic Party (MDP) and even some members of the ruling coalition.
The Budget Committee initially proposed recommendations for the government to submit project details and provide quarterly updates throughout the year. However, these recommendations were removed through a motion introduced by Manadhoo MP Husnee Mubarik of the ruling People’s National Congress (PNC), which passed 68-11. The budget itself was approved shortly after.
Key Figures in the 2025 Budget
- Total Budget: MVR 56.6 billion
- Expenditure: MVR 49.2 billion
- Recurrent Expenditure: MVR 35.9 billion
- Capital Expenditure: MVR 13.3 billion
- Revenue and Grants: MVR 39.8 billion
- Grants: MVR 2.5 billion
- Debt Repayment: MVR 3.9 billion
- Budget Deficit: MVR 9.4 billion (7.8% of GDP)
Debt Challenges and Economic Risks
The Maldives is entering 2025 with substantial debt obligations, including an external debt service of approximately USD 600 million in 2025 and over USD 1 billion in 2026. This includes a USD 500 million sukuk. Leading credit rating agencies Moody’s and Fitch have downgraded the Maldives’ credit rating, citing risks of default.
According to the World Bank, public debt stood at USD 8.2 billion, or 116% of GDP, in the first quarter of 2024 and is expected to rise to 118% by the end of the year. The high levels of fiscal spending, particularly on public sector investments and subsidies, continue to raise alarms among economic experts.
Criticism and Defence of the Budget
The MDP and Meedhoo MP Ahmed Siyam Mohamed of the Maldives Development Alliance (MDA) criticised the lack of transparency and called for a revised budget with detailed allocations. However, the administration defended the budget as necessary for developmental projects.
Construction Minister Dr Abdulla Muththalib stated that the budget’s flexibility allows for more projects. Meanwhile, the government has assured creditors of its commitment to meeting debt obligations and is rolling out fiscal reforms in 2025. These include restructuring the Aasandha public health insurance scheme, revising subsidies, and reforming State-Owned Enterprises to address economic challenges.
While the government remains optimistic about its ability to drive development and manage debt, the lack of transparency and the nation’s heavy fiscal burden leave many questioning the long-term sustainability of its financial policies. The coming year will test the government’s resolve to balance developmental ambitions with fiscal prudence.
