Free aid receives paltry 7% of estimated amount in 7 months

The Maldives expected to receive MVR 2.59 billion in grants this year, but only 7% of that, or MVR 172.6 million, has come in during the first seven months. This is 51% less than what was received last year during the same time.

Despite this, the Finance Ministry says they've kept the budget in surplus. Government revenue was MVR 22.2 billion, while spending was MVR 21.9 billion. Most of the revenue came from taxes:

• Goods and Services Tax (GST): MVR 9.54 billion

• General Goods and Services Tax (GGST): MVR 2.87 billion

• Tourism Goods and Services Tax (TGST): MVR 6.67 billion

While overall government spending went down, money spent on salaries and allowances increased from MVR 7.85 billion last year to MVR 8.40 billion this year.

The main reason for budget shortfalls is a big reduction in money spent on projects. Capital expenditure dropped by 60.8% from MVR 6.87 billion last year to MVR 2.70 billion this year.

The Maldives often budgets for a lot of free aid, but doesn't receive it all, and this amount is decreasing each year. Last year, MVR 1.47 billion was budgeted for aid, but only MVR 660 million was received. In 2023, the Maldives received MVR 1.02 billion in aid.

China and India are major sources of loans and grants. Although relations with India were initially difficult under President Dr. Mohamed Muizzu's government, they have since stabilized. The Maldives has twice postponed a USD 50 million payment to India. India's Prime Minister Narendra Modi has also signed an agreement to provide a new credit line of USD 565 million for infrastructure projects.

Despite assurances of receiving aid, the current government has not yet seen much of it.