The Maldives recorded a budget deficit of MVR 9.9 billion as of 31 October 2024, according to the latest report from the Ministry of Finance. Despite generating cumulative revenue and grants of MVR 29.1 billion during the first ten months of the year, this figure fell short of the projected MVR 33.5 billion, highlighting ongoing fiscal challenges.
The bulk of the nation’s revenue was driven by tax collections, particularly the Tourism Goods and Services Tax (TGST), which contributed MVR 7.8 billion. However, non-tax revenues and grants underperformed, collectively bringing in MVR 6.8 billion, indicating difficulties in diversifying income sources beyond the tourism sector.
On the expenditure side, total government spending reached MVR 39 billion. The majority of these funds, approximately MVR 27.9 billion, were allocated to recurrent expenditures, including salaries, wages, and pensions. This represents an increase of nearly MVR 1.5 billion compared to the previous year, driven by rising administrative costs.
In contrast, capital expenditures, which are crucial for infrastructure projects, fell to MVR 11.1 billion. This reduction is particularly evident in the spending on infrastructure assets, which decreased significantly compared to last year. Despite this, the Ministry of Education utilised a substantial portion of its budget, while healthcare allocations also remained a priority with MVR 1.3 billion in spending.
Social protection initiatives have seen substantial investment, with the National Social Protection Agency utilising over MVR 2.7 billion, reflecting the government’s commitment to welfare programmes amid economic uncertainties. However, reduced allocations to environmental projects, including renewable energy initiatives, raise questions about the country’s commitment to sustainability goals.
With financing and interest costs amounting to MVR 3.8 billion, the Maldives continues to rely on domestic borrowings to manage its fiscal requirements. As the government reconciles unrecorded transactions from 2023, it faces the challenge of balancing fiscal discipline with the need for critical investments in social and economic sectors.
The latest fiscal report suggests that without strategic adjustments, the Maldives may continue to face budgetary pressures, especially as it grapples with rising recurrent expenditures against a backdrop of modest revenue growth.
