Maldives’ Budget Deficit Climbs to MVR 215 Million; Trend Expected to Continue

The expenditure spike in March will see the state face its first deficit for 2024 after revenue exceeded expenditure in the first two months of the year.

The deficit rose from MVR 165 million at the end of the first week of March to MVR 215 million by the second week, according to the weekly fiscal report released by the Ministry of Finance.

Expenditure has increased by MVR 7.4 billion so far with a large percentage spent on recurrent expenses. The largest recurrent expenditure was spent on the state’s administrative and operating expenses.

The biggest increase in March occurred in administrative and operating expenditure, with MVR 700 million spent during the first two weeks. The second-largest expenditure during this period was loan and interest payments.

In terms of revenue, the state has received MVR 7.2 billion so far this year, which is lower than in the same period last year. However, 2024 tax revenue has thus far exceeded the previous year, standing at MVR 6.1 billion, up by MVR 348 million.

The deficit is expected to increase in the coming days. According to the Ministry of Finance’s Annual Borrowing Plan (ABP), the state will need to cover a total MVR 16.31 billion deficit in 2024.

The current deficit is lower than expected due to administration measures such as suspension on infrastructure development spending. The administration says it will increase the number of development projects as funds are available in the coming days.

The 2024 budget projects a MVR 14.08 billion deficit, while the principal repayments of external and domestic debt is set to cost the state an additional MVR 2.23 billion. The ministry is looking to fund the gap, as per the ABP, by issuing treasury bills and treasury bonds priced at MVR 3.95 billion within the domestic market and to raise the remaining MVR 12.36 billion through project loans, sustainable financing, loans, and bonds via external sources.

Additionally, the Ministry, in January, issued a Request for Proposals (RFP) seeking institutional investors to secure up to US$550 million through loans and treasury securities in line with the 2024 ABP.