Spending on loan repayment exceed budgeted amount

An amount higher than what was allocated in the state budget has been spent on loan repayment this year.

MVR 2.20 billion was allocated in this year’s state budget for loan repayment. Statistics publicized by the Finance Ministry show that MVR 2.31 billion was spent for loan repayment as of December 19th, marking an increase of MVR 106 million than what was budgeted.

The expenditure on the loan repayment during the same period last year stood lower, at MVR 2.10 billion.

Notably, state expenditure so far this year has already climbed to MVR 45.98 billion. The state expenditure during the same period last year stood at MVR 44.34 billion.

The increased expenditure has been linked to recurrent expenses including salaries and pension. In this regard, MVR 12.4 billion has been spent on salaries and pension so far this year marking an increase of MVR 1.41 billion compared to the same period last year.

The current administration has brought reforms to Aasandha and subsidy systems in order to cut down expenditure. Despite these measures, the expenditure on Aasandha has exceeded the allocated the budget and last year’s total. Nevertheless, the expenditure on subsidies has decreased compared to last year.

Aasandha

Spending on Aasandha last year: MVR 2.02 billion

Budget allocated for Aasandha this year: MVR 2 billion

Spending on Aasandha this year: MVR 2.05 billion

Subsidies

Spending on subsidies last year: MVR 3.84 billion

Budget allocated for subsidies this year: MVR 3.67 billion

Spending on subsidies this year: MVR 3.62 billion

Capital expenditure on infrastructure development projects has also decreased this year. While MVR 14.11 billion was incurred in capital expenditure last year, the amount dropped to MVR 13.92 billion this year.

The Parliament had originally passed a budget of MVR 49.8 billion for this year. In October, the Parliament approved a supplementary budget of MVR 5.1 billion – increasing the total budget to MVR 55 billion. This has increased the total budget deficit to MVR 18 billion, which is 16 percent of the GDP.

Maldives has an external debt service obligation of about USD 600 million due in 2025, and more than USD 1 billion in 2026 – including a USD 500 million sukuk.

Subsequently, international credit agencies lowered Maldives’ ranking this year.

The Maldivian administration has repeatedly provided assurance it will honor its debt obligations to creditors and investors. It has also implemented measures aimed at alleviating the situation, including reducing the number of political appointees, reforming the Aasandha public health insurance scheme and raising taxes.

Notably, the Parliament has passed a projected state budget of MVR 56.6 billion for 2025 which includes MVR 11.5 billion in additional fiscal reform plans.