With increased salaries, recurrent expenses make up 62% of 2026 budget

Finance Minister states 62 percent of the projected state budget of MVR 64.2 billion for next year makes up for recurrent expenses.

Minister Zameer presented the MVR 64.2 billion budget proposed by the government at Thursday’s parliamentary sitting.

The record-high budget anticipates receiving MVR 40.4 billion in revenue and grant aid. Total expenditure under the proposed budget has been set at MVR 49.9 billion, of which MVR 39.9 billion is designated for recurrent expenses, representing 62 percent of the total.

MVR 9.3 billion has been allocated in the budget for repayment of loans.

According to Zameer, the record-high MVR 64.2 billion budget was proposed because loan payments are due. He noted that the budget comes up to MVR 55 billion when these expenses are deducted.

“The biggest reason behind the increased expenses next year will be the expenses incurred for increased salaries and allowances under the changes planned as part of the government’s pay harmonization policy,” he said.

While MVR 40 billion is expected to be received as revenue, MVR 31.1 billion is projected to come from taxes. Non-tax revenue has been projected at MVR 8.7 billion, while an additional MVR 373.6 million is expected from grant assistance.

Zameer explained that this marks a 6.6 increase in revenue and grant assistance compared to what was budgeted for this year.

MVR 9.3 billion has been allocated for capital expenditure, reflecting a 31.7 percent increase in project spending projected for next year. Minister Zameer stated that new infrastructure projects will be initiated in 2026, alongside the continuation of ongoing projects under the government’s PSIP initiatives.

Under the proposed budget, the government is required to secure MVR 26.3 billion in financing, of which MVR 16.8 billion are planned to be obtained from international parties.