TGST revenue rises as council grants and subsidy spending increase

The Maldives recorded a budget deficit of MVR 1.5 billion in the year to July 16, 2026, even as state revenue grew by double digits, according to the Ministry of Finance and Public Enterprises' latest Weekly Fiscal Developments report.

The deficit marks a sharp reversal from the same period last year, when the state posted a surplus of MVR 817.3 million. The ministry said spending outpaced revenue growth over the period.

Tourism tax drives revenue growth

Tourism Goods and Services Tax (TGST) brought in MVR 6.7 billion, the ministry said, up MVR 475 million, or 7.7 percent, from MVR 6.2 billion in the same period last year. The ministry described TGST as a key driver of revenue growth this year.

Combined GST revenue, covering both TGST and general GST, rose 9.0 percent to MVR 9.7 billion. General GST revenue alone rose from MVR 2.7 billion to MVR 3.0 billion.

Total tax revenue reached MVR 17.6 billion, up 11.3 percent from MVR 15.8 billion a year earlier. Grants received by the state also rose sharply, from MVR 190.5 million to MVR 438.8 million, an increase of 130.3 percent. Non-tax revenue fell 2.9 percent, from MVR 5.1 billion to MVR 4.9 billion.

Total state revenue and grants combined stood at MVR 23.0 billion, up 9.0 percent from MVR 21.1 billion in the same period last year.

Spending rises on subsidies and council grants

Government spending also rose. Block grants to island and city councils reached MVR 1.5 billion, up 16.0 percent from MVR 1.3 billion a year earlier. The ministry said this funding supports decentralized service delivery and island development.

Subsidy spending rose even faster, up 86.3 percent to MVR 3.1 billion from MVR 1.7 billion. Combined spending on council grants and subsidies reached MVR 4.6 billion. The ministry said this reflects government priority on decentralization and social protection programs.

Total state expenditure reached MVR 24.5 billion, up 21.0 percent from MVR 20.3 billion a year earlier. Recurrent expenditure, which includes subsidy costs and salary costs linked to pay harmonization, rose 20.8 percent to MVR 21.4 billion. Capital expenditure rose 22.1 percent to MVR 3.2 billion.

Primary balance remains in surplus

Despite the overall deficit, the ministry said the primary balance, which excludes debt servicing and interest payments, remained in surplus at MVR 1.2 billion.