The Maldivian government has reported a fiscal surplus of MVR 1.1 billion for the year to date as of 5 June 2025, driven by robust revenues—particularly from the tourism sector. However, capital expenditure continues to significantly lag behind projections, highlighting ongoing challenges in executing development projects.
According to the Ministry of Finance’s latest Weekly Fiscal Developments report, dated as of June 5, total cumulative revenue and grants reached MVR 16.7 billion, surpassing the corresponding expenditure of MVR 15.6 billion. The strong revenue performance was buoyed by Tourism Goods and Services Tax (TGST), which contributed MVR 5.6 billion, outpacing last year’s receipts for the same period.
Tax revenues accounted for 78% of total revenue, with TGST alone comprising over one-third of this figure. Non-tax revenues and grants made up 21% and 1%, respectively. Non-tax inflows were supported by increases in fees, especially the Airport Development Fee and resort rent.
Despite this revenue momentum, capital spending remains subdued. Of the MVR 13.3 billion allocated for capital expenditure in 2025, only MVR 1.5 billion (just 11.3%) has been utilised so far. In contrast, recurrent expenditure—largely comprising salaries, subsidies, and administrative costs—has reached MVR 14.1 billion, indicating much higher budget utilisation in operating expenses than in development investments.
Notably, Public Sector Investment Program (PSIP) spending on key infrastructure areas, such as health, transport, and housing, showed underutilisation. For instance, outlays for transport projects, though the largest among PSIP categories, only reached MVR 814.5 million.
The Ministry of Construction, Housing and Infrastructure, which oversees a significant portion of development projects, has only spent MVR 1.1 billion of its approved MVR 8.0 billion budget, indicating a budget utilisation rate of just 14%.
Meanwhile, debt servicing remains a substantial burden. The government has already repaid MVR 3.0 billion in loans and transferred nearly MVR 903.8 million to the Sovereign Development Fund. Government securities outstanding stood at MVR 95.4 billion, with short-term treasury bills and medium-term bonds forming the bulk of this debt.
As the fiscal year progresses, the government faces the challenge of translating strong revenue performance, especially from its vital tourism sector, into tangible development outcomes. With less than 15% of the capital budget disbursed, accelerating the implementation of infrastructure and public service projects will be crucial to sustaining economic momentum and meeting national development goals.
