The Maldivian government is set to propose a state budget exceeding MVR 60 billion for next year – marking the biggest budget in the country’s history.
The Parliament had originally passed a budget of MVR 49.8 billion for this year. But on Tuesday, the legislative assembly approved a supplementary budget of MVR 5.1 billion – increasing the total budget to MVR 55 billion. The supplementary budget has widened the total budget deficit to MVR 18 billion.
The Finance Ministry is scheduled to submit next year’s proposed state budget to the Parliament on Thursday.
A government official told Sun on Wednesday that the Finance Ministry is proposing a budget of MVR 64 billion. But the official declined to disclose details.
“There may be some minor adjustments to the figures. But the projected budget for next year is MVR 64 million,” said the official.
The Finance Ministry has yet to make any official comment regarding next year’s budget figures. However, Deputy Speaker Ahmed Nazim said earlier this week that the budget will be submitted on Thursday.
Maldives has an external debt service obligation of about USD 600 million due in 2025, and more than USD 1 billion in 2026 – including a USD 500 million sukuk. Top rating agencies Moody’s and Fitch have both downgraded Maldives’ credit rating citing risk of default.
According to the World Bank, the Maldives’ total public and publicly guaranteed debt stood at USD 8.2 billion, or equivalent to 116 percent of GDP, in the first quarter of this year. The Finance Ministry estimates that with the supplementary budget, the publicly guaranteed debt will rise to 118 percent of the GDP at the end of the year.
World Bank said that despite Maldives’ economic growth, the increasing public debt and high fiscal spending, particularly for public sector investments and subsidies, remains worrying.
It stressed the need for urgent actions to reduce spending.
But despite the concerns, the Maldivian administration has provided assurance it will honor its debt obligations to creditors and investors.
The administration has announced economic reforms to alleviate the situation, including reducing the number of political appointees, implementing pay cuts, and raising taxes.
