In a commendable display of fiscal responsibility, the government has significantly reduced its expenditure in the early months of this year. According to the Ministry of Finance’s Weekly Fiscal Development Report, as of February 6, total government spending, encompassing loan repayments, lending, and investments, stood at MVR 3.2 billion. This marks a substantial decrease from the MVR 4.4 billion recorded during the same period last year.
A detailed breakdown reveals that MVR 448.6 million was allocated for loan repayments, MVR 241 million for lending, and MVR 45.1 million for investments this year. Notably, recurrent expenditure amounted to MVR 2.3 billion, a reduction from the MVR 2.9 billion observed in the corresponding period of the previous year. Employee-related expenses, including salaries, benefits, and pensions, accounted for MVR 1.1 billion, while administrative and operational costs were MVR 1.2 billion. In comparison, last year’s figures were MVR 1 billion and over MVR 1.8 billion, respectively.
Capital expenditure experienced a significant decline, registering at MVR 102.5 million this year, down from MVR 787.6 million in the same timeframe last year. On the revenue front, the government collected MVR 3.7 billion, with tax revenues contributing MVR 3.3 billion and non-tax revenues adding MVR 393.5 million.
This disciplined financial approach is particularly noteworthy given the substantial debt inherited from previous administrations. Historically, the Maldives has grappled with escalating public debt, which surged from 55% of GDP in 2004 to an estimated 97% in 2010. This increase was attributed to various factors, including the 2004 tsunami, the global financial crisis, and expansive fiscal policies of past governments. For instance, between 2004 and 2009, the average monthly salary of a government sector worker increased from MVR 3,223 to MVR 11,136, leading to a ballooning fiscal deficit that reached 26% of GDP in 2009.
The current administration’s efforts to curtail expenditure and manage debt are steps toward restoring fiscal health and ensuring sustainable economic growth. By addressing the challenges posed by inherited debt and implementing prudent financial measures, the government is paving the way for a more resilient and robust economy.
