The latest Weekly Fiscal Developments report by the Ministry of Finance shows a striking divergence between rising government revenue and sluggish expenditure, particularly in capital projects, as of 12 June 2025. While the Maldives recorded a fiscal surplus of MVR 1.3 billion during this period, it was largely driven by low public spending rather than accelerated economic activity or structural savings.
From 1 January to 12 June, total revenue and grants reached MVR 16.96 billion, representing strong performance relative to projections. Tax revenue, especially from Tourism Goods and Services Tax (TGST), was the major contributor, supported by notable growth in non-tax revenue streams such as airport development fees and fees from state-owned enterprises.
Despite the revenue gains, government expenditure lagged significantly. Just MVR 15.68 billion was spent during the same period, accounting for only 32 percent of the approved annual budget of MVR 49.2 billion. The bulk of this was recurrent expenditure, with capital spending trailing far behind.
Recurrent expenditure, dominated by salaries, allowances, and operational costs, reached MVR 14.17 billion. In contrast, capital expenditure was just MVR 1.5 billion—less than 12 percent of the capital allocation for the year. Spending on infrastructure, development projects, and asset acquisition remains far below expectations, suggesting delays in project implementation or bottlenecks in public investment management.
The trend is also evident in the Public Sector Investment Programme (PSIP), which saw only MVR 1.5 billion spent out of the MVR 12.4 billion allocated. Major sectors such as housing, environmental protection, transport, and education saw capital spending far below their mid-year benchmarks. For example, only MVR 88.5 million of the MVR 1.8 billion allocated for housing and infrastructure was utilised. Similarly, transport infrastructure, despite its strategic importance, recorded just under 20 percent utilisation.
The Ministry of Construction, Housing and Infrastructure, which holds one of the largest budget shares, had utilised just MVR 1.1 billion out of its MVR 8 billion allocation, as of mid-June. The Ministry of Tourism and Environment also underperformed, using only MVR 132.9 million from a budget of MVR 1.7 billion.
Meanwhile, the report indicates that the overall primary balance—excluding interest costs—stood at a surplus of MVR 3.35 billion. However, this figure reflects under-execution of planned development, rather than efficiency gains or policy-driven cost savings.
The fiscal surplus has important implications. On paper, it indicates sound financial footing. But in practice, it raises concerns over the state’s ability to deliver planned infrastructure and public service improvements. Underspending, particularly on capital projects, may stall economic growth, limit job creation, and undermine the objectives of decentralised development.
As the government aims to strengthen economic resilience and expand infrastructure across the islands, the mid-year slowdown in capital spending underscores the need for better project planning, procurement efficiency, and institutional coordination. Without these improvements, the Maldives risks falling behind on its development targets, despite having the fiscal space to spend.
