Government project spending drops 17.4% in 7 months

Government expenditure on projects has seen a significant decline, dropping by 17.4 percent in the first seven months of the current fiscal year, according to data released by the Finance Ministry.

The figures indicate that government spending had decreased compared to the same period last year. Despite the reduction in project spending, the state budget maintained a surplus, standing at MVR 314.3 million, according to Finance Ministry statistics.

In a comparison of budget balances, the first seven months of last year recorded MVR 6.4 billion, while the same period in 2023 saw MVR 4.2 billion.

Government revenue was MVR 22.2 billion, while spending was MVR 21.9 billion. Most of the revenue came from taxes:

• Goods and Services Tax (GST): MVR 9.54 billion

• General Goods and Services Tax (GGST): MVR 2.87 billion

• Tourism Goods and Services Tax (TGST): MVR 6.67 billion

The main reason for budget shortfalls is a big reduction in money spent on projects. Capital expenditure dropped by 60.8% from MVR 6.87 billion last year to MVR 2.70 billion this year.

While the government's recurrent expenditures have decreased compared to the previous year, a rise has been observed in salaries and allowances. Expenditure on salaries and allowances amounted to MVR 8.40 billion this year, an increase from MVR 7.85 billion during the corresponding period last year.

The Maldives often budgets for a lot of free aid, but doesn't receive it all, and this amount is decreasing each year. Last year, MVR 1.47 billion was budgeted for aid, but only MVR 660 million was received. 

China and India are major sources of loans and grants.