The latest fiscal figures from the Ministry of Finance show a clear imbalance in government spending this year. As of mid November, total expenditure has reached MVR 34.1 billion, with recurrent spending accounting for the overwhelming majority. Around 86 percent of all spending so far has gone to recurrent items, leaving only 14 percent for capital expenditure. Recurrent spending now stands at roughly 80 percent of its annual allocation, while capital spending remains below 40 percent.
This reflects longstanding structural pressures on the Maldivian budget. The state’s wage bill remains substantial, with salaries, allowances and pensions contributing significantly to recurrent costs. Grants, contributions and subsidies add further weight, including billions spent on Aasandha and other welfare schemes. Interest payments and financing costs continue to grow as well. These are fixed and recurring commitments that the government cannot easily reduce or postpone.
Capital expenditure, however, depends heavily on how quickly projects can progress. Even when large allocations are approved for the Public Sector Investment Programme, spending only occurs once tenders are completed, contracts are awarded and physical work begins. This often leads to slower disbursement, particularly when designs, environmental approvals or contractor mobilisation take longer than expected. By November, less than half of the year’s PSIP allocation had been spent.
A closer look at ministries shows how pronounced these delays can be. The Ministry of Construction, Housing and Infrastructure holds one of the biggest capital budgets, at around MVR 7.9 billion. Yet only about 41 percent of this allocation has been utilised. Housing and related infrastructure projects show some of the slowest progress, with less than 10 percent of the budget spent so far this year. Water and sewerage projects, essential for outer islands, also remain far below expected utilisation.
Several factors likely contribute to this. Large construction projects require land clearance, detailed designs, environmental assessments and contractor capacity, all of which introduce delays. If a tendering process is challenged or cancelled, further months are lost. Projects tied to external loans or credit lines may face additional procedural requirements. Shifts in ministerial portfolios or administrative restructuring can slow decision making as well.
Transport related projects, particularly airports and bridges, appear to be the exception this year. Spending in this category has already reached or exceeded its approved allocation, indicating faster progress compared to social or environmental infrastructure.
The skewed ratio between recurrent and capital spending has broader implications. While recurrent spending ensures the delivery of government services, it does not necessarily contribute to long term economic productivity. Capital investments, when implemented effectively, support growth, improve public services and strengthen the foundations of the economy. Underutilisation of capital budgets means the state bears the cost of borrowing without realising the intended benefits of development.
The relatively modest deficit recorded so far this year is partially a result of low capital spending. If project execution accelerates in the final weeks of the year, the fiscal balance will shift. If not, many projects will roll into the next year, extending timelines and potentially increasing total costs.
For the construction and housing sector in particular, the gap between budgetary ambition and on the ground delivery raises questions about capacity, coordination and project sequencing. Given ongoing public concern about housing shortages and infrastructure gaps, the ministry’s slow utilisation rate will attract heightened scrutiny.
Overall, the latest fiscal update highlights a familiar challenge: the state continues to carry a heavy recurrent load while struggling to translate capital budgets into completed development projects. How this imbalance is addressed in the coming months will shape the country’s economic and infrastructural trajectory.
