The Maldives recorded its smallest budget deficit in six years during 2025, according to newly released figures from the Ministry of Finance, reflecting what officials describe as significant progress in strengthening the country’s public finances.
Data contained in the Ministry’s Budget Performance Report 2025 shows that the fiscal deficit—the gap between government revenue and expenditure—fell to MVR 4.4 billion last year, substantially lower than both recent years and initial projections.
The figure represents a major improvement from the MVR 9.4 billion deficit forecast when the 2025 state budget was submitted to Parliament in late 2024. By the end of the fiscal year, the actual deficit had been reduced by MVR 5 billion, or more than half of the original estimate.
As a share of the economy, the deficit declined to 3.6 percent of Gross Domestic Product (GDP), marking a sharp turnaround from previous years. The deficit stood at 9.9 percent of GDP in 2024, 10.5 percent in 2023, 8.4 percent in 2022, 10 percent in 2021 and 16.6 percent in 2020 during the height of the COVID-19 pandemic.
The latest figures represent the strongest fiscal performance recorded since the Maldives began recovering from the economic disruptions caused by the pandemic.
According to the Finance Ministry, tighter expenditure controls and reforms in the implementation of public investment projects played a key role in narrowing the deficit.
Government spending for the year totaled MVR 44.2 billion, approximately MVR 5 billion below the MVR 49.2 billion originally allocated in the approved budget.
One of the notable achievements highlighted in the report was the absence of a supplementary budget. The Ministry noted that 2025 was the first year in the past five years in which government expenditures were successfully managed within the approved budget framework without seeking additional funding during the year.
Strong revenue performance also contributed to the improved fiscal outcome.
While the budget initially projected MVR 39.8 billion in revenue and grants, actual collections reached MVR 39.9 billion, slightly exceeding expectations by MVR 74.4 million.
Officials noted that although some revenue streams performed below expectations, strong non-tax revenue collections helped offset shortfalls. Key contributors included resort lease extension fees, land sale and transfer charges, and work permit fees.
The tourism sector, the backbone of the Maldivian economy, also performed largely in line with forecasts.
The government projected tourist arrivals of 2,248,120 visitors for 2025. Actual arrivals reached 2,246,516, falling short of the target by just 1,604 visitors. Meanwhile, tourist bednights exceeded expectations, reaching more than 14.2 million compared to the forecast of 14.15 million.
The report further revealed that 2025 generated the highest level of government revenue and grants recorded since 2019. Compared to 2024, total revenue increased by MVR 4.8 billion, rising from MVR 35.1 billion to MVR 39.9 billion.
The improved fiscal performance comes amid broader government efforts to strengthen macroeconomic stability, rebuild foreign currency reserves and improve debt management.
According to the Finance Ministry, these priorities formed the foundation of the government’s economic strategy throughout 2025, alongside maintaining social protection programs, subsidies and essential public services.
Despite the progress, public debt remains one of the country’s major economic challenges.
By the end of December 2025, total government debt, including guaranteed debt, stood at MVR 154.9 billion, equivalent to 129.8 percent of GDP. During the year, the government spent MVR 10.1 billion on debt servicing, including MVR 5.3 billion in principal repayments and MVR 4.8 billion in interest payments.
The report concludes that the 2025 fiscal results demonstrate notable progress in controlling expenditure growth, improving budget discipline and maintaining revenue performance despite ongoing global economic uncertainties.
For policymakers, the reduction in the deficit is likely to be viewed as an important step toward improving fiscal sustainability as the Maldives continues efforts to strengthen its economic position and manage long-term debt obligations.
