The Government of Maldives recorded a fiscal surplus of MVR 1.18 billion by 20 March 2025, driven primarily by strong revenue collections and significantly lower-than-expected capital expenditure. The data, published in the Ministry of Finance and Planning’s latest Weekly Fiscal Developments report, reflects a trend of delayed implementation of infrastructure projects and development spending, even as recurrent expenses continue to grow.
Capital Expenditure Falls Behind
Although MVR 12.6 billion has been allocated for capital expenditure in the 2025 budget, only MVR 554.1 million had been spent by 20 March—just 4.4% of the annual allocation. By comparison, recurrent expenditure had already reached MVR 7.08 billion, or nearly 19.3% of the approved allocation. The sharp contrast suggests major delays or bottlenecks in the rollout of capital projects, particularly in infrastructure, housing, and public services.
Spending on infrastructure assets, which comprises the bulk of capital expenditure, amounted to just MVR 302.2 million. Only MVR 178.9 million has been spent on land and buildings and MVR 72.1 million on capital equipment. Public Sector Investment Programme (PSIP) disbursement is also muted, with only MVR 674 million released out of MVR 12.4 billion allocated for the year.
Revenue Growth Buoyed by Tourism and Fees
On the revenue side, the government collected MVR 8.81 billion in revenue and grants by 20 March—22.1% of the annual target of MVR 39.8 billion. This outpaced expenditure and led to the rare early-year surplus.
Tax revenues amounted to MVR 6.99 billion, led by strong collections from the Tourism Goods and Services Tax (TGST), which brought in MVR 2.66 billion. This marks an increase of MVR 362 million compared to the same period last year, reflecting robust tourist arrivals in Q1 2025.
Non-tax revenues also saw healthy growth, reaching MVR 1.77 billion. A sharp uptick in fees and charges—particularly from airport-related income—played a crucial role. Notably, rent from resorts increased to MVR 289.9 million, up from MVR 225.5 million a year earlier.
Recurrent Pressure Continues
Despite the surplus, pressures on the recurrent side are evident. Salaries, wages, and pensions totalled MVR 2.62 billion by mid-March, up from MVR 2.22 billion in the same period last year. This includes increases in employee allowances and pensions, particularly basic pensions which have risen by more than 60% year-on-year.
Grants and subsidies also remain elevated, with Aasandha spending at MVR 618.1 million and total subsidies reaching MVR 796.7 million. While these increases are in line with welfare policy goals, they could strain fiscal space if capital spending catches up in the latter half of the year.
A Cautious Outlook
The headline surplus masks underlying weaknesses in development spending and raises concerns about the pace of public investment delivery. Without a meaningful pickup in capital project execution, the broader goals of economic stimulus and infrastructure development could falter.
The surplus also stems in part from timing mismatches rather than structural fiscal strength. If delayed capital projects begin to move forward in the coming months, expenditure could accelerate quickly and erode the current surplus.
