The Maldives government has proposed a MVR 59.7 billion state budget for 2027, outlining spending priorities across healthcare, housing, infrastructure and public services while introducing measures aimed at strengthening fiscal stability.
Presented to Parliament by Minister of Finance and Government Shareholding Hassan Zareer, the proposed budget is MVR 4.5 billion lower than the MVR 64.2 billion budget for 2026, representing a reduction of approximately seven percent.
The budget sets out MVR 52.6 billion in total expenditure, with MVR 42.7 billion allocated for recurrent spending and approximately MVR 9.9 billion for capital expenditure.
Recurrent expenditure, which accounts for approximately 81 percent of total spending, covers the government’s day-to-day operating costs, including salaries, pensions, subsidies, public services and financing expenses.
Of this amount, approximately MVR 17 billion is allocated for salaries, allowances, pensions and benefits, while MVR 13.9 billion is earmarked for grants, contributions and subsidies. Financing and interest-related costs account for a further MVR 4.9 billion.
Capital expenditure represents approximately 19 percent of total spending and includes investments in infrastructure, public facilities and other development projects.
The government has allocated MVR 8.2 billion to the Public Sector Investment Programme (PSIP), which finances development projects across the country.
The administration intends to prioritise the completion of ongoing contracted projects while managing new development commitments. As part of its fiscal management measures, the government plans to limit domestically financed PSIP expenditure to no more than 70 percent of the total programme allocation.
Healthcare receives one of the most significant allocations in the proposed budget, with MVR 10.2 billion earmarked for the sector.
The government intends to use the allocation to strengthen healthcare services across the atolls, expand specialised treatment facilities and improve access to essential medicines and medical equipment.
Among the major initiatives announced is the establishment of the Maldives Tertiary Hospitals Group, which will bring together existing tertiary hospitals and regional hospitals being upgraded to tertiary standards.
The initiative is intended to improve access to advanced medical treatment outside the Greater Malé Region, reducing the need for patients from the atolls to travel to the capital for specialised healthcare.
The government also plans to expand diagnostic services, including CT scanners, MRI facilities, X-ray services and hyperbaric decompression chambers.
Additional improvements are planned for dental care, ear, nose and throat services, obstetrics, gynaecology and reproductive healthcare.
Another priority is the introduction of a centralised procurement system for medical consumables and hospital equipment, alongside improvements to pharmaceutical procurement through State Pharma.
The proposed reforms are intended to reduce procurement costs, improve the availability of medicines and strengthen the distribution of medical supplies across healthcare facilities.
Housing development is another major area of spending, with MVR 3 billion allocated for housing-related initiatives.
The budget also includes MVR 750 million in equity funding for housing loan schemes, supporting the government’s efforts to improve access to housing finance.
The allocations form part of the administration’s broader housing development programme, which remains a major component of its development agenda.
To finance the proposed spending, the government expects to collect MVR 43.2 billion in revenue and grants during 2027.
Tax revenue is projected at MVR 33.6 billion, accounting for approximately 78 percent of total expected revenue and grants. The remaining MVR 9.6 billion is expected from other revenue sources and grants.
The government has not proposed increases to existing tax rates as part of the budget.
Despite the reduction in the overall budget, the government projects a fiscal deficit of MVR 9.4 billion for 2027, equivalent to approximately 7.3 percent of gross domestic product (GDP).
This compares with an estimated deficit of approximately MVR 7.6 billion, or 6.2 percent of GDP, for 2026.
The deficit represents the difference between government revenue and expenditure, with the shortfall requiring financing through borrowing or other available sources.
The country’s public debt is projected at approximately MVR 161.3 billion, equivalent to 124.5 percent of GDP.
Against this backdrop, the government has outlined several fiscal management measures intended to improve public finances over the coming years.
These include limiting domestically financed development spending, managing debt servicing obligations and maintaining interest payments on external loans at 12 percent of state revenue.
The administration is targeting a reduction in the overall fiscal deficit to five percent of GDP by the end of 2028, alongside a reduction in PSIP expenditure to seven percent of GDP.
The Finance Minister also projected an improvement in the primary fiscal balance from 2.5 percent of GDP in 2026 to 3.4 percent in 2027.
The primary fiscal balance measures the difference between government revenue and expenditure excluding interest payments, providing an indication of the government’s fiscal position before debt servicing costs.
Overall, the proposed 2027 budget places emphasis on maintaining essential public services, expanding healthcare access, supporting housing development and completing ongoing infrastructure projects while pursuing measures intended to strengthen fiscal sustainability.
The proposed budget will undergo joint review by Parliament’s Public Accounts Committee and Economic Affairs Committee, with parliamentary debate scheduled to begin seven days after its submission.
