Government Subsidy Spending Passes Full-Year Budget by 48% with Months to Go

The government had spent MVR4.26 billion on subsidies by 8 October, 47.6% more than the MVR2.89 billion approved for the whole of 2026, according to the Finance Ministry’s latest weekly fiscal figures.

The Weekly Fiscal Developments report covering 1 January to 8 October shows subsidy spending 71.8% higher than the MVR2.48 billion recorded at the same point in 2025.

Spending on Aasandha, the state health insurance scheme, reached MVR1.91 billion, 94.4% of its MVR2.02 billion annual allocation and 23.6% more than a year earlier. The wider category of grants, contributions and subsidies stood at MVR10.37 billion, up 43.7% and 98.1% of its budget.

The report does not explain the increase in subsidies. In its 2 April statement on settling the 2021 sukuk, the ministry said the government was seeking additional financing from multilateral partners to meet higher fuel-financing requirements.

Spending Up 18.3%

Total government expenditure reached MVR35.98 billion, up 18.3% from MVR30.42 billion a year earlier and 73.1% of the MVR49.21 billion approved for the year.

Recurrent spending rose 18.6% to MVR31.05 billion. Within it, administrative and operational expenses grew 23.8% to MVR18.93 billion, and salaries, wages and pensions 10.8% to MVR12.05 billion. Financing and interest costs fell 5.2% to MVR3.80 billion.

Capital spending rose 16.6% to MVR4.93 billion, 53.1% of its annual budget. Spending under the Public Sector Investment Programme, listed separately in the report, was MVR4.81 billion, 21.4% lower than a year earlier.

The ministry notes that its expenditure figures show transactions that have been posted, which are not necessarily settled in cash.

Revenue Up 3%

Revenue and grants totalled MVR31.57 billion, 3.0% more than a year earlier and 78.2% of the annual forecast.

Grants rose to MVR514.6 million from MVR290.8 million.

A Deficit of MVR4.42 Billion

The government recorded an overall deficit of MVR4.42 billion for the period, compared with a surplus of MVR216.9 million at the same point in 2025. The primary balance, which excludes financing and interest costs, was a deficit of MVR616.4 million, against a surplus of MVR4.23 billion a year earlier.

The approved budget projects a full-year deficit of MVR8.84 billion, of which half had been reached by 8 October.

Loan repayments, recorded as a memorandum item, totalled MVR10.10 billion, up from MVR4.51 billion a year earlier. The 2026 figure includes the period in which the government repaid the US$500 million sukuk in April and the final US$50 million of a State Bank of India facility in September.

Moody’s, which upgraded the Maldives to Caa1 on 8 October, forecast a fiscal deficit of 8.0–8.5% of GDP in 2026, above the 7.1% projected in the government’s budget.