The Maldives’ fiscal position appears stable, with the Ministry of Finance reporting a surplus of MVR 1,223.6 million as of 29 May 2025, reinforced by strong revenue generation—particularly from the tourism sector. However, the government’s subdued development spending raises concerns about the timely execution of its infrastructure commitments.
Tourism Revenue Leads, Recurrent Expenditure Dominates
According to the Ministry’s latest Weekly Fiscal Developments report, total revenue and grants collected reached MVR 16.5 million, while expenditure stood at MVR 15.3 million. The Tourism Goods and Services Tax (TGST) continues to be the leading contributor to government coffers, reaffirming the sector’s central role in the Maldivian economy.
Recurrent expenditure, particularly wages and salaries, saw a significant increase, totalling MVR 5.95 million, which is MVR 424.9 million higher than the same period last year.
Capital Spending Falls Short of Targets
However, capital expenditure remains well below target. Out of the MVR 12,378.7 million allocated to the Public Sector Investment Programme (PSIP) for 2025, only MVR 1,451.1 million (11%) has been spent to date. This is less than half of what was spent during the same period in 2024, when MVR 3,626.5 million had already been disbursed.
Despite a total approved budget of MVR 49,178.5 million for the year, utilisation remains low across several development portfolios. Ministries responsible for key infrastructure, housing, and construction initiatives are particularly behind schedule, suggesting possible bottlenecks in project execution or procurement processes. The report notes that only 12% of PSIP funds have been utilised thus far, calling into question the pace and prioritisation of national development projects.
Debt Servicing on Track
In terms of debt management, the government appears to be meeting its obligations with discipline. MVR 2,567.9 million—or nearly 64% of the MVR 3,873.0 million earmarked for debt servicing—has already been repaid.
Surplus Driven by Low Spending, Not Tight Fiscal Controls
Interestingly, while the primary surplus now stands at MVR 3,2901 million, the report suggests this is largely the result of under-execution of capital spending rather than fiscal tightening. Transfers to the Sovereign Development Fund (SDF)—an important reserve for future obligations—have also been limited, with only 28.7% of budgeted funds disbursed.
Looking Ahead: Execution Is Key
Though the government’s financials are currently in positive territory, the ongoing delays in development spending risk slowing progress on essential infrastructure and public services. As the second half of the fiscal year approaches, the government will need to ramp up disbursements and execution if it aims to deliver on its policy goals and ensure long-term economic resilience.
