President Dr Mohamed Muizzu has ratified amendments to the Fiscal Responsibility Act, extending the deadline for preparing the country’s five-year Fiscal Responsibility Charter to two years from the start of a presidential term.
The amendment, passed by Parliament on Monday and ratified by the President on Tuesday, requires the government to draft, approve and publish the Fiscal Responsibility Charter in the official gazette within 24 months. Under the previous law, the charter was required to be finalised within six months of a new administration taking office.
The revised legislation also relaxes certain fiscal obligations during this two-year period. Specifically, the government will not be required to implement actions outlined in the Fiscal Responsibility Charter, nor complete feasibility studies for Public Sector Investment Programme (PSIP) projects before including them in the state budget during the extended timeframe.
The Fiscal Responsibility Act, introduced by the government and approved last year, mandates the creation of a five-year charter by the Minister of Finance for each presidential term. The charter is intended to ensure fiscal sustainability, transparency, and long-term economic discipline throughout an administration’s tenure.
With the latest amendments, Parliament has also removed a provision that defined the presidential term as beginning after an 18-month period, effectively aligning fiscal planning timelines with the administration’s full term in office.
The Fiscal Responsibility Act was proposed in November last year to replace the former State Expenditure Responsibility Act, with the stated objective of tightening oversight on government borrowing and strengthening controls over money creation.
Under the law, the government is permitted to borrow from the Maldives Monetary Authority (MMA) to manage short-term cash flow needs, subject to a cap of 2.5 percent of the average state revenue recorded over the previous three years.
The changes mark a significant adjustment to the country’s fiscal governance framework, reshaping the timeline and obligations surrounding long-term financial planning under the current administration.
