State Expenditure Drops 15.5% as Revenue Rises 7.8%

State expenditure has fallen by 15.5 percent compared to the same period last year, according to the Finance Ministry’s latest Weekly Fiscal Development Report. As of September 9, total spending from the state budget stood at MVR 25.4 billion, largely due to a sharp decline in capital expenditure.

The report shows that capital spending dropped by 57.7 percent, with MVR 3.3 billion spent so far this year. Out of this, MVR 2.9 billion was allocated to infrastructure projects such as bridges, roads, and airports. However, progress on Public Sector Investment Program (PSIP) projects remains slow. While MVR 12.4 billion had been budgeted for PSIP this year, only MVR 4.1 billion has been utilized, with harbours and docking projects receiving the largest share at MVR 2.6 billion. Spending on housing projects remains minimal, with just MVR 131.6 million disbursed.

Recurrent expenditure also recorded a 4.5 percent year-on-year decline, with 57.7 percent of recurrent spending directed toward administrative operations. Lower costs in procurement and repairs contributed significantly to the reduction, with procurement down 15.5 percent and repair and maintenance expenses down 15.6 percent. Transport-related expenses dropped 5.8 percent, while government aid and subsidies decreased by 7 percent.

Despite the fall in expenditure, the government maintained a budget surplus of MVR 868.7 million. Revenue and free aid reached MVR 26.3 billion by the end of last week, reflecting a 7.8 percent increase from the previous year.

Tax revenue accounted for 78 percent of this income, totaling MVR 20.5 billion. The increase was driven by higher collections from tourism-related taxes. Green tax receipts surged by 104.6 percent, departure tax rose by 57.9 percent, and income tax climbed 17.3 percent compared to last year. The Airport Development Fee also increased by 56.8 percent, supported by a 9.7 percent rise in tourist arrivals, with over 1.5 million visitors recorded so far in 2025.

Non-tax revenues also showed gains, particularly from land acquisition and conversion fees, lease period extension fees, and resort rents. Overall, government revenue and free aid grew by nearly 8 percent year-on-year, strengthening the state’s fiscal position despite reduced expenditure.