The finance ministry has submitted a budget of MVR 36.9 billion for 2022, an increase of roughly MVR 2 billion over the budget for 2021.
Minister of Finance Ibrahim Ameer presented the 2022 budget to the People’s Majlis on Sunday, which has a deficit of MVR 9.7 billion.
The 2022 budget forecasts revenue of MVR 24.3 billion, with taxes accounting for MVR 15.4 billion, non-tax revenue accounting for MVR 6 billion, and financial aids and other sources accounting for MVR 2.9 billion.
Tax income contributes for around 63 percent of projected revenue in 2022, with the majority coming from the MVR 4.8 billion Tourism Goods and Services Tax (TGST), while GST is expected to bring in MVR 2.9 billion. In addition, the government expects revenue of MVR 3.2 billion from import duty, MVR 2.7 billion from business taxes, MVR 824 million from the Green Tax, and MVR 769 million from the airport service fee.
Non-tax revenue from resort leasing fees is estimated to reach MVR 1.7 billion in 2022. This sum is larger than in prior years since the halted lease payments due to the COVID-19 pandemic are included in the 2022 budget.
In 2022, the government expects to collect MVR 1.2 billion in interest and profits, MVR 741 million in registration and licencing fees, MVR 636 million in work permit and expatriate quota fees, and MVR 868 million in other non-tax revenue.
While the government expects to earn MVR 24.3 billion in revenue, spending for 2022 is estimated to surpass revenue by around MVR 10 billion, with most of the money going toward recurrent costs. Recurrent expenditures are estimated to reach MVR 24.8 billion, with PSIP programmes costing MVR 6.2 billion and other capital expenditures costing MVR 5.8 billion.
With the COVID-19 pandemic shrinking the economy by 33.3 percent in 2020, the finance ministry predicts that the economy will be on an upward track, increasing by around 31.6 percent by the end of 2021 and 12 percent by the end of 2022.
The financing deficit had grown due to a fall in revenue and an increase in costs in 2020. With preparations in place to close the shortfall, MVR 13.4 billion in funding is required for 2022 to cover all costs.
Furthermore, MVR 2.9 billion in funds is necessary to repay debts, with an additional MVR 805 million in funding required for miscellaneous obligations.
MVR 7.5 billion of the total funding necessary for 2022 is expected to come from foreign sources. This comprises USD 200 million in bond and sukuk sales, USD 187 million in loan disbursements, USD 50 million in green or blue bond sales, and USD 50 million in budget support.
Moreover, a total of MVR 5.9 billion in funding from local sources is anticipated.
The budget for 2022 also anticipates acquiring MVR 771 million from the privatisation of state-owned enterprises through the sale of shares and collaboration with strategic partners. But the companies being privatised, or the strategy have yet to be announced.
