Government revenues and grants reached MVR 36.9 billion as of 18 December 2025, while total expenditure stood at MVR 38.9 billion, resulting in an overall deficit of MVR 2.0 billion, according to the Ministry of Finance and Planning’s Weekly Fiscal Developments for Week 48.
At first glance, the fiscal position appears steadier than in 2024 at the same point in the year. Revenue and grants were higher by about MVR 3.8 billion, an increase of roughly 12 percent year on year, driven mainly by higher tax receipts and a notable rise in non tax revenue. Total expenditure, meanwhile, was lower by approximately MVR 5.7 billion, largely due to a sharp decline in capital spending compared to last year. A closer look at the numbers, however, shows a budget increasingly reliant on tourism linked revenues and fees, with development spending falling behind plan and debt servicing continuing to weigh heavily on public finances.
Tax revenues reached MVR 27.5 billion, up around 10 percent compared to 2024. GST remains the dominant source, amounting to MVR 15.2 billion, with Tourism GST contributing MVR 10.1 billion and General GST MVR 5.1 billion. This concentration highlights the continued dependence of state finances on tourism activity and domestic consumption. Other tourism related inflows also rose, with Airport Service Charges and Departure Tax reaching MVR 1.76 billion and Green Tax increasing to MVR 2.10 billion.
Not all tax categories followed the same trend. Import duties declined to MVR 3.0 billion, while business and property tax fell to MVR 5.19 billion compared to last year. Corporate income tax remained broadly unchanged at MVR 2.83 billion, while individual income tax rose to MVR 460.2 million. Overall, the tax picture suggests strong collections from travel and visitor related channels, but weaker momentum from trade taxes and broader business activity.
Non tax revenue grew more rapidly than tax revenue, reaching MVR 9.14 billion, up from MVR 7.54 billion a year earlier. Fees and charges accounted for MVR 4.08 billion, including MVR 1.78 billion from the Airport Development Fee and MVR 1.15 billion from registration and licence fees. Property income totalled MVR 2.44 billion, driven mainly by MVR 1.74 billion in resort rent and MVR 558.3 million from land acquisition and conversion fees. At the same time, dividends from state owned enterprises declined to MVR 662.5 million.
One notable weakness on the revenue side was grants, which fell to MVR 301.5 million, roughly half the level recorded at the same point in 2024. With limited grant inflows, a larger share of government activity is being financed through domestic revenue and borrowing, reducing flexibility at a time when debt servicing costs are already high.
On the expenditure side, recurrent spending continues to dominate. Recurrent expenditure stood at MVR 33.4 billion, slightly higher than last year. Salaries, wages and pensions accounted for MVR 13.38 billion, while administrative and operational expenses reached MVR 19.96 billion. Transfers, grants and subsidies remained a major component at MVR 9.75 billion, including MVR 2.09 billion for Aasandha and MVR 3.43 billion in subsidies. Even without sharp increases, the scale of these commitments limits room for adjustment.
Capital expenditure remains the most striking weakness. Spending on capital projects totalled MVR 5.56 billion, compared to MVR 12.37 billion in 2024. By Week 48, capital budget utilisation was only about 44 percent, while recurrent expenditure utilisation exceeded 90 percent. Infrastructure asset spending reached MVR 4.91 billion, including MVR 2.03 billion for roads, bridges and airports, and MVR 1.61 billion for land and buildings.
The Public Sector Investment Program shows uneven execution across sectors. Transport accounted for MVR 4.42 billion in spending, largely driven by airport projects at MVR 3.20 billion. Environmental protection stood at MVR 632.1 million, water and sewerage at MVR 322.2 million, and housing and infrastructure at just MVR 196.9 million. Land reclamation and road construction together amounted to MVR 698.6 million, including MVR 449.9 million for reclamation works. The figures suggest that while some large transport projects are moving, other high profile development areas, including housing, remain slow in fiscal terms.
The deficit dynamics underline a structural issue. The government recorded a primary surplus of MVR 2.52 billion, meaning revenue exceeded non interest expenditure. However, financing and interest costs of MVR 4.54 billion pushed the overall balance into a deficit of MVR 2.02 billion. This indicates that the core challenge lies less in day to day spending and more in the cost of servicing debt.
Debt related pressures are also evident in other indicators. Loan repayments reached MVR 5.16 billion, more than double the level recorded at the same time last year. Transfers to the Sovereign Development Fund amounted to MVR 2.50 billion, also significantly higher than in 2024. While these measures may support longer term fiscal management, they absorb resources that could otherwise support capital execution.
Government securities data reinforces this picture. As of mid December 2025, total securities outstanding stood at MVR 98.5 billion, with MVR 89.3 billion in domestic instruments and MVR 9.25 billion in external instruments. A large share of this debt is held in shorter maturities, increasing refinancing needs and interest costs. Treasury Bills outstanding amounted to MVR 39.6 billion, while Treasury Bonds stood at MVR 27.7 billion, alongside USD denominated bonds.
The report also notes that expenditure figures reflect posted transactions, which may not yet be settled in cash. This caveat is important when interpreting short term movements, particularly for large payments related to interest, contractors, and transfers.
