The Maldives registered a budget surplus of MVR 534.6 million by the end of August 2025, according to the Ministry of Finance and Planning’s latest Weekly Fiscal Developments report. This positive fiscal outcome resulted from robust revenue collection coupled with lower-than-projected capital expenditure. While indicating short-term financial stability, the report also highlights concerns regarding the potential impact of reduced capital investment on long-term development goals.
Cumulative revenues and grants for the period totaled MVR 25.3 billion, exceeding expenditures of MVR 24.8 billion. This revenue stream was significantly bolstered by strong tax collection, reaching MVR 19.7 billion. A substantial portion of this came from Tourism Goods and Services Tax (MVR 7.2 billion) and Green Tax (MVR 1.4 billion). Non-tax revenues contributed an additional MVR 5.4 billion, primarily generated from fees, charges, and resort rental income. The robust performance in revenue collection played a crucial role in achieving the surplus.
Government expenditure reached MVR 21.7 billion, with recurrent spending accounting for the lion’s share at MVR 21.7 billion. This recurrent spending was largely driven by substantial outlays for salaries, wages, and pensions, totaling MVR 9.4 billion. In contrast, capital expenditure was significantly lower than anticipated, reaching only MVR 3.1 billion. This represents a considerable decrease compared to the MVR 7.3 billion spent during the same period in the previous year. The shortfall in capital expenditure was primarily attributed to delays in infrastructure and land-related projects.
The report further emphasizes the underutilization of funds allocated to the Public Sector Investment Programme (PSIP). Only MVR 3.9 billion of the approved MVR 12.4 billion budget for the PSIP had been utilized by the end of August. This under-execution of capital projects is a key factor contributing to the overall fiscal picture, and raises questions about the efficiency of project implementation.
The substantial budget surplus provides a positive indication of the Maldives’ short-term financial health. However, the considerable slowdown in capital investment presents a potential challenge for long-term development plans. The reduced pace of project delivery could impact the country’s infrastructure development and overall economic growth trajectory. Further analysis and strategic planning are needed to address this disparity between short-term fiscal stability and the potential long-term implications of under-investment in capital projects. The government will need to carefully consider how to balance fiscal prudence with the need for sustained investment in crucial infrastructure and development initiatives.
