The latest Weekly Fiscal Developments report by the Ministry of Finance reveals a strong fiscal position for the Maldives, with a recorded surplus of MVR 2.14 billion as of 10 April 2025. This surplus reflects a significant gap between cumulative revenue and grants (MVR 11.2 billion) and expenditure (MVR 9.1 billion), driven in part by higher non-tax revenues and relatively low capital spending.
Higher Non-Tax Revenue and Tourism GST Drive Gains
Total revenue and grants for the period from 1 January to 10 April reached MVR 11.2 billion, outpacing the same period in 2024. Notably, non-tax revenues rose to MVR 2.47 billion, up from MVR 1.89 billion during the same time last year. This growth was led by increased collections from fees, charges, and rent from resorts, as well as improved returns from state-owned enterprises (SOEs), with SOE dividends growing nearly fourfold to MVR 223.7 million.
Tax revenue, which makes up the majority of collections, stood at MVR 8.69 billion—slightly lower than the MVR 8.76 billion collected by this time last year. This decline was primarily due to a drop in business and property tax revenue. However, gains in Tourism Goods and Services Tax (TGST) helped offset the shortfall, increasing to MVR 3.58 billion from MVR 3.32 billion, indicating continued strength in the tourism sector.
Capital Expenditure Falls Behind
While revenue performance has exceeded expectations, government spending—particularly on capital projects—has lagged. Only MVR 693.3 million has been spent on capital outlays so far, representing just 5.5% of the MVR 12.56 billion approved for the year. By comparison, more than MVR 2.97 billion had been spent on capital projects by this point in 2024.
Key infrastructure areas such as transport, housing, water, and sewerage have seen especially low disbursement. For example, out of an approved MVR 4.17 billion for transport-related projects, only MVR 392.3 million has been utilised. Similarly, housing projects saw just MVR 53.1 million in expenditure out of an approved MVR 1.8 billion.
The underperformance in capital spending raises concerns about delays in implementing public infrastructure projects and broader development goals. This could have implications for economic activity in the second half of the year, especially in sectors dependent on government-driven construction and services.
Recurrent Spending Dominates
Recurrent expenditure continues to dominate public spending, accounting for 92% of total expenditure so far this year. Of the MVR 9.1 billion spent, MVR 8.4 billion went toward recurrent costs—of which MVR 3.57 billion was allocated to salaries, wages, and pensions. Spending on Aasandha, subsidies, and other grants also remains high, indicating the government’s continued commitment to welfare programmes.
Meanwhile, administrative and operational expenses have declined from MVR 5.4 billion last year to MVR 4.8 billion, reflecting tighter control over discretionary spending.
Debt and Financing Outlook
Despite the current surplus, public debt remains substantial. As of 7 April 2025, total government securities outstanding stood at MVR 93.9 billion. This includes MVR 37.5 billion in short-term Treasury Bills, MVR 27 billion in MVR-denominated Treasury Bonds, and MVR 9.9 billion in USD-denominated bonds. External Islamic instruments, including sukuk, make up a further MVR 9.2 billion.
The government has repaid MVR 2.44 billion in loans so far this year, almost triple the MVR 847.9 million repaid by this time last year, suggesting a more aggressive debt service approach.
While revenue performance is strong and the government has managed to maintain a surplus for now, the gap in capital spending points to underlying implementation challenges. With only 5.5% of capital expenditure utilised by April, the pressure is mounting to accelerate project execution in the months ahead. Whether this will affect development outcomes remains to be seen, but the imbalance between revenue inflows and actual service delivery warrants closer scrutiny.
