Parliament passes MVR 56.6bn budget criticized for lack of details

The Parliament on Wednesday passed a projected state budget of MVR 56.6 billion for 2025, despite criticism regarding the lack of specifics on how the money will be spent.

The 2025 budget was presented to the Parliament by Finance Minister Moosa Zameer on October 31. But unlike previous, the budget does not mention allocations for specific projects.

The Budget Committee had made several recommendations when it passed the budget last week, in an apparent attempt to address these concerns. These recommendations, proposed by Deputy Speaker and Dhiggaru MP Ahmed Nazim, asked the government to submit details regarding government-funded projects next year, and provide quarterly updates regarding the projects throughout the year.

But during the parliamentary sitting on Wednesday afternoon, Manadhoo MP Husnee Mubarik, a parliamentarian from the ruling People’s National Congress (PNC), presented a motion to exclude the recommendations.

The motion passed with a majority vote of 68-11.

The Parliament, which the PNC holds a supermajority in, then took the vote on the budget. It passed with a majority vote of 70-11.

Key budget figures:

• Budget: MVR 56.6 billion
• Expenditure: MVR 49.2 billion
• Recurrent expenditure: MVR 35.9 billion
• Capital expenditure: MVR 13.3 billion
• Revenue and grants: MVR 39.8 billion
• Grants: MVR 2.5 billion
• Debt repayment: MVR 3.9 billion
• Budget deficit: MVR 9.4 billion

The main opposition Maldivian Democratic Party (MDP) had repeatedly expressed concern over the lack of details in the budget. The MDP was not alone in this. Meedhoo MP Ahmed Siyam Mohamed, the president of the Maldives Development Alliance (MDA), which is aligned with the PNC, also asked for greater transparency. Both he and the MDP asked that the government withdraw and resubmit the budget with details.

However, the PNC administration continues to defend the budget. Infrastructure Minister Dr. Abdulla Muthalib said the budget is formulated in a manner that allows the government to run more developmental projects.

The most pressing concern as the Maldives heads into 2025 is the country’s high debt.

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.

In its recent in its biannual update released in October, the 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.

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 it will rise to 118 percent of the GDP at the end of the year.

But despite the concerns, the Maldivian administration has provided assurance it will honor its debt obligations to creditors and investors. It has also implemented measures aimed at alleviating the situation, including reducing the number of political appointees, reforming the Aasandha public health insurance scheme and raising taxes.

The administration plans to roll out more fiscal reforms in 2025, including more Aasandha reforms, and reforms of subsidies, welfare schemes, and State-Owned Enterprises.