Maldivian Government Presents MVR 59.7 Billion Budget for 2027, Deficit at MVR 9.4 Billion

The Maldivian government has submitted a MVR 59.7 billion budget for the next fiscal year to the People's Majlis. Finance Minister Hassan Zareer presented the budget, which is 7% smaller than the current year's MVR 64.2 billion budget. The apparent decrease is attributed to a MVR 7.7 billion lump-sum payment made this year to settle a $500 million Sukuk debt. Actual expenditure is projected to rise by 6.6% to MVR 52.6 billion. The budget introduces no new taxes but includes an increase in the GST registration threshold to MVR 1.5 million, aimed at aiding small and medium enterprises. However, revenue from various fees, including vessel license fees and tourism administrative fees, is expected to rise significantly, generating an additional MVR 260 million. Recurrent expenditure accounts for 81% of the budget, including MVR 17 billion for salaries, allowances, and pensions. The deficit is estimated at MVR 9.4 billion, or 7.3% of GDP. To cover this, the government plans to raise MVR 15.6 billion through T-bills (MVR 8.7 billion), external loans and bonds (MVR 6.9 billion), and MVR 2.4 billion from the Sovereign Development Fund. Key sectors receiving increased funding include social housing (MVR 1.4 billion) and fisheries, including MVR 525 million for a fish factory in Hulhumalé. However, land reclamation and road construction budgets have been cut by 58% and 40% respectively. Analysts warn that risks such as a 10% drop in tourism revenue or a 15% rise in oil subsidies could increase the deficit by up to MVR 14 billion, potentially halting major infrastructure projects.