Capital expenditure by the Maldivian government has sharply decreased as of 10 July 2025, highlighting a significant slowdown in major infrastructure investments compared to the same period last year.
Data from the latest Weekly Fiscal Developments report released by the Ministry of Finance and Planning indicates that total capital expenditure fell from MVR 5.83 billion by July 2024 to just MVR 2.14 billion this year. This marks a decline of approximately 63% year-on-year.
Expenditure on infrastructure assets, traditionally a substantial component of the government’s capital spending, saw one of the largest decreases, dropping from MVR 2.8 billion in July 2024 to MVR 1.21 billion. Likewise, investments in land and buildings fell notably from MVR 2.77 billion to MVR 582.1 million during the same period.
The decrease was also evident in the Public Sector Investment Programme (PSIP), a key driver for infrastructure development in the country. The PSIP budget utilisation plunged from MVR 5.27 billion last year to MVR 2.07 billion in July 2025. Critical areas such as transport, environmental protection, and housing infrastructure were among the sectors severely affected.
Despite the substantial drop in capital expenditure, recurrent expenditure, which covers salaries, administrative costs, and operational expenses, showed a less dramatic reduction. Salaries and pensions slightly increased from MVR 6.72 billion in July 2024 to MVR 7.19 billion by July 2025, reflecting ongoing commitments to public employment and social security.
The overall financial position of the government, however, has shown signs of improvement, recording a surplus of MVR 1.36 billion. This surplus contrasts sharply with the deficit of MVR 4.83 billion reported by the same date last year, primarily driven by the considerable reduction in capital expenditure.
The reduced investment in capital projects raises concerns over potential delays in crucial infrastructure initiatives, with implications for longer-term economic development. This decline may reflect broader fiscal tightening measures, prioritisation issues, or project implementation challenges facing the government. Ongoing reconciliation and further financial reporting will provide more clarity on the underlying reasons for the reduction.
