The Ministry of Finance and Planning has reported that government finances turned to surplus in June 2025, as stronger revenues offset lower spending.
According to the Monthly Fiscal Developments report, total revenue and grants for June reached MVR 2.98 billion, up 22 percent compared to the same month last year. Tax collections, including GST and business-related taxes, alongside higher non-tax revenues such as property income and state-owned enterprise dividends, drove the increase.
Expenditure in June fell slightly by 3 percent year-on-year to MVR 2.77 billion. Recurrent spending, which accounts for the bulk of expenditure, stood at MVR 2.31 billion, a 3.5 percent decline from June 2024. Salaries, wages and pensions rose modestly, but operational costs were lower. Capital expenditure also eased by 0.8 percent to MVR 462 million, reflecting subdued spending on infrastructure assets and development projects.
The result was an overall fiscal surplus of MVR 208 million for the month. For the first half of 2025, government finances recorded a cumulative surplus of MVR 1.2 billion, a significant turnaround from the MVR 4.9 billion deficit during the same period last year. The primary balance also improved sharply, moving from a deficit of MVR 2.7 billion in 2024 to a surplus of MVR 3.6 billion this year.
While revenues have grown, expenditure patterns highlight that capital spending continues to lag. In the first half of 2025, capital expenditure amounted to just MVR 2.1 billion, down from MVR 5.7 billion a year earlier. Spending on major infrastructure, land reclamation and development projects remains slow, even as recurrent expenses such as salaries and pensions rise.
The figures suggest that improved revenues and restrained spending have provided short-term relief to public finances. However, the under-execution of capital projects raises questions about the pace of government development initiatives and their contribution to long-term growth.
