Spending on PSIP projects down by MVR 2 billion

Spending on Public Sector Investment Program (PSIP) projects has gone down by over MVR 2 billion compared to the previous year, according to the latest weekly fiscal development report released by the Financial Ministry.

The 60 percent decline in spending on PSIP project comes amid mounting concern lack of developmental projects in the Maldives.

The government has allocated a budget of MVR 12.38 billion for PSIP projects this year.

But the latest weekly fiscal development report shows that as of May 29, the spending on PSIP projects stands at MVR 1.45 billion, down from MVR 3.63 billion during the same period.

The biggest spending on PSIP this year has been on projects aimed at easing transport, such as the development of airports and harbors. Total MVR 811.1 million was spent on such projects this year, down from MVR 1.07 billion during the same period last year.

In a statement released with the fiscal report, the Finance Ministry attributed this decline in spending on PSIP projects to “numerous efforts by the government this year to reform policies related to PSIP.”

The incumbent People’s National Congress (PNC) has been repeatedly hit with criticism over lack of developmental projects. In 2024, the administration blamed the stall in projects to inadequate budget allocations passed by the Parliament in 2023, back when the main opposition Maldivian Democratic Party (MDP) held a supermajority in the legislative assembly.

The administration promised that projects would restart this year, with the new annual budget passed by the PNC-led Parliament.

But the statistics show a decline in spending on projects, with capital expenditure down by 65 percent and spending on PSIP projects down by 60 percent.

The administration has also been hit with criticism from the MDP for awarding the majority of government contracts to state-owned enterprises, and overlooking the private sector.

The 2024 annual report of the biggest state-owned contractor, the Maldives Transport and Contracting Company (MTCC), shows a steep decline in the company’s revenues and profits – attributed mainly to cash flow challenges due to persistent delays in payments for its construction and dredging projects.

Addressing the criticism over the lack of projects, President Dr. Mohamed Muizzu said during an event in M. Muli on May 20 that contracts for some 800 projects will be signed this year.

“…We are contracting around 700 or 800 projects over the course of four to five months starting from February. To ensure the speedy completion of projects. We have full confidence regarding the successful completion of these projects,” he said.

He said the projects will begin producing results next year.

The fiscal report shows the overall expenditure stood at MVR 15.32 billion as of May 29 – down by 13.6 percent from MVR 18.30 billion during the same period last year, resulting in an overall budget surplus of MVR 1.2 billion.

This decline in expenditure is mainly due to a steep 65 percent decline in capital expenditure, and a slight 2 percent decline in recurrent expenditure, which dropped from MVR 14.17 billion to MVR 13.89 billion.

Meanwhile, revenues and grants are up 7.6 percent from MVR 15.37 billion to MVR 16.54 billion.