The Maldives is gearing up for a substantial state budget next year, with estimates suggesting it could reach a staggering MVR 50 billion, as revealed in a statement from the finance ministry. This projection, part of the state’s medium-term fiscal strategy, takes into account baseline expenditure, cost-cutting measures, and the implementation of new projects and programs.
While the medium-term fiscal strategy report outlines an estimated budget of MVR 50 billion, the official budget for the next year will be presented to the parliament by the end of November. For context, this year’s budget was approved at MVR 42.8 billion, highlighting the significant increase being considered.
The report not only indicates an increase in the estimated budget but also provides a detailed breakdown. Expenditures are forecasted to reach MVR 48 billion next year, with the total budget deficit projected to be MVR 9.8 billion, equivalent to 8.5% of the state’s per capita income. Through austerity policies, government spending will be curtailed to MVR 44 billion. In the medium term, expenditures will rise at an average of 0.5% annually.
Furthermore, the report suggests that changes in revenue and expenditure policies are anticipated to reduce the overall deficit and enhance the primary balance of the budget. The financing for next year’s budget is expected to amount to MVR 13.4 billion.
While debt repayment costs for the upcoming year are relatively low, the medium-term outlook sees a higher total budget deficit compared to previous years. In particular, disbursements for projects funded through loans are set to rise in the next fiscal year.
To fund the budget, the ministry is planning to raise MVR 6.1 billion by selling T-bonds in the domestic market. As the nation prepares for the release of the official budget, these estimates underscore the significant financial considerations and strategies that will shape the Maldives’ fiscal landscape in the near future.