Government Achieves MVR 1.4 Billion Budget Surplus Amid Major Spending Cuts

The Maldivian government has achieved a budget surplus of MVR 1.4 billion by mid-June, following a significant reduction in public expenditure across key sectors. The latest figures from the Ministry of Finance show that both recurrent and capital spending have declined notably, enabling the government to operate within its means despite ongoing development commitments.

The report reveals that total government expenditure reached MVR 16.2 billion, significantly lower than the MVR 21.0 billion spent during the corresponding period in 2024. This decline in spending particularly in capital projects and administrative functions has been pivotal in creating the surplus.

Recurrent expenditure saw a moderate decline of 3.4 percent. Within this category, 58.7 percent of funds were allocated to administrative functions of government offices, down 8.6 percent year-on-year. Spending cuts were notable across several sub-categories: office supply purchases dropped by 70 percent, repair and maintenance expenses fell by 20.7 percent, and transport-related spending decreased by 15.3 percent. Allocations for aid and subsidies were also trimmed by 3.6 percent.

However, not all sectors saw reductions. Aasandha, the government’s universal health insurance scheme, recorded a slight increase of 1.4 percent in spending. In contrast, medical welfare expenses saw a steep decline of 35.2 percent. Meanwhile, block grants to local councils increased, suggesting a push for more decentralized financial support.

A sharp 70.1 percent drop in capital expenditure also contributed to the budget surplus. Only MVR 1.6 billion was spent in this category, of which MVR 1.4 billion went toward infrastructure development, including roads, bridges, and airport projects. These investments represent just 13 percent of the annual capital budget approved by Parliament.

Out of the MVR 12.4 billion allocated for the 2025 Public Sector Investment Program (PSIP), MVR 1.6 billion has been utilized so far. While last year’s capital projects were dominated by land reclamation and road construction, this year’s PSIP prioritizes flood mitigation. A total of MVR 816.2 million has already been spent on such efforts, including ongoing works at Velana International Airport.

The government attributes the spending decline in part to strengthened PSIP-related policy implementation measures, which aim to optimize efficiency in public investment.

Overall, the total state budget expenditure as of 19 June stood at MVR 21.1 billion, reflecting a 7.0 percent decrease from last year. With both capital and recurrent spending under control and revenues holding steady, the government’s prudent fiscal management has resulted in a rare mid-year budget surplus.