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Thursday 24 Oct 2024
LOCAL EDITION
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LOCAL EDITION
Minister of Finance Moosa Zameer. (Photo: President's Office)
Finance Minister Moosa Zameer has submitted a supplementary budget of MVR 5.1 billion to the Parliament for approval.
The new budget seeks to supplement the MVR 49.8 billion state budget for 2024 that was passed by the Parliament last year.
The Finance Ministry said that it decided to submit the supplementary budget not because the government has exhausted the 2024 state budget. According to the ministry, the total spending as of September 30 stands at MVR 37.4 billion – 76 percent of the budget.
During a parliamentary sitting on Thursday morning, Zameer presented a supplementary budget of MVR 5,119,508,129. This will increase the 2024 budget to MVR 55 billion.
Out of the total supplementary budget, MVR 1.5 billion are for recurrent expenditure. This includes:
MVR 3.6 billion is for capital expenditure. This includes:
According to the supplementary budget, the Finance Ministry estimates the state will receive an additional MVR 640 million in revenue and grants. This includes MVR 61 million in tax revenue, MVR 379 million in non-tax revenue, and MVR 199 million in grants.
With the supplementary budget, the total budget deficit will increase to MVR 18 billion, which is 16 percent of the GDP.
The Finance Ministry projects the debt-GDP ration will be at 118 percent at the end of the year.
The MVR 5.1 billion supplementary budget proposed by the government is significantly lower than the previously estimated MVR 10 billion.
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.
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 and raising taxes. On Wednesday, President Dr. Mohamed Muizzu announced the decision to implement pay cuts for two years in the 2025 budget. He asked to have his salary cut by half, and to have the salaries of parliamentarians, political appointees, employees of state-owned enterprises, heads of independent institutions, and top officials in the judiciary reduced.
