The Maldivian Parliament’s joint committee, consisting of members from the Public Accounts Committee and the Economic Committee, has approved a government-proposed supplementary budget of MVR 5.1 billion, passing it without any changes. This supplementary budget, presented last Thursday, increases the total national budget for 2024 to MVR 55 billion, adding to the previously approved MVR 49.8 billion.
During a committee meeting on Monday, Maamigili MP Qasim Ibrahim put forward a motion to adopt the supplementary budget as submitted by the government. This motion was supported by Hoarafushi MP Ali Moosa and Velidhoo MP Mohamed Abbas, passing with a majority vote, with only Kanditheemu MP Ameen Faisal abstaining.
The Finance Ministry clarified that the supplementary budget was proposed not because the existing budget had been exhausted, but to address heightened expenditure in certain areas. As of 30 September, the ministry reported total spending of MVR 37.4 billion, equating to 76 percent of the initial budget. Rising costs in specific segments exceeded initial projections, which the ministry attributed to limited budget allocations for projects and delays in implementing fiscal consolidation measures.
The supplementary budget allocates MVR 1.5 billion for recurrent expenditure, including MVR 24.4 million for salaries, MVR 200 million for medical consumables, MVR 1 billion for subsidies, and MVR 262.6 million for medical aid. Capital expenditure is set at MVR 3.6 billion, with MVR 2 billion directed towards land reclamation, construction, and infrastructure development, alongside MVR 441 million for capital contributions, MVR 650 million for contingencies, and MVR 458.4 million for student loans.
The Finance Ministry projects additional revenue of MVR 640 million from the supplementary budget, comprising MVR 61 million in tax revenue, MVR 379 million in non-tax revenue, and MVR 199 million in grants. As a result, the total budget deficit will rise to MVR 18 billion, representing 16 percent of GDP, with the debt-to-GDP ratio expected to reach 118 percent by the end of the year.
Maldives faces significant external debt obligations, with approximately USD 600 million due in 2025 and over USD 1 billion in 2026, including a USD 500 million sukuk. Top credit rating agencies Moody’s and Fitch have recently downgraded the Maldives’ credit rating due to default risks.
In response to these financial pressures, the Maldivian administration has reassured creditors of its commitment to meet debt obligations and has announced several economic reforms to address the situation. These reforms include reducing the number of political appointees, raising taxes, and implementing pay cuts.
