Historic Shift: Maldives Ends July 2025 With Budget Surplus

The Maldivian state budget recorded a surplus of MVR 314.3 million by the end of July 2025, marking the first time in recent history that the government has achieved a positive fiscal balance over the first seven months of the year.

According to the latest Weekly Fiscal Developments Report released by the Ministry of Finance and Planning, this surplus stands in stark contrast to the significant deficits recorded in previous years. For the same period in 2024, the government ran a deficit of MVR 6.4 billion, while in 2023, the deficit stood at MVR 4.2 billion.

The historic surplus comes on the back of a substantial reduction in government expenditure. As of July 31, total spending stood at MVR 21.9 billion, a 17.4 percent decrease compared to the same period last year. This includes a 2.2 percent drop in recurrent expenditure and a sharp 60.8 percent decline in capital expenditure.

Administrative expenses—which account for the bulk of recurrent spending—fell by 7.3 percent year-on-year. Spending cuts were observed across several categories: office supplies dropped by 20 percent, repairs and maintenance by 20.1 percent, travel expenses by 5.1 percent, and grants, contributions, and subsidies were reduced by 10.7 percent.

Capital expenditure for the year so far amounts to MVR 2.7 billion. A majority of this—MVR 2.3 billion—was directed towards infrastructure projects including roads, bridges, and airport developments, representing 20.5 percent of the total capital budget approved by Parliament.

The 2025 state budget had earmarked MVR 12.4 billion for the Public Sector Investment Programme (PSIP). By July’s end, MVR 3.4 billion had been spent on PSIP-related projects. Unlike previous years, where spending was largely focused on land reclamation and road development, this year’s priorities shifted toward climate resilience. Flood mitigation efforts emerged as the largest PSIP investment category, accounting for MVR 2.2 billion, including significant costs linked to the final phases of the Velana International Airport expansion.

In addition, MVR 114.6 million was spent on housing projects across the country. The government attributed the overall reduction in PSIP expenditure to tighter spending regulations and policy shifts intended to enhance fiscal discipline.

The Ministry of Finance and Planning noted that the positive balance was the result of both prudent fiscal management and targeted spending. As the second half of the year progresses, all eyes will be on whether the government can sustain this momentum and close the year with a surplus—a feat not seen in over a decade.