MVR 6.7B collected as TGST, marking 7.7% increase

The latest Weekly Fiscal Developments report released by the Finance Ministry has highlighted an increase in Tourism Goods and Services Tax (TGST) revenue, alongside a notable increase in government expenditure on subsidies and block grants provided to local councils.

The report, which covers fiscal developments up to May 16, identifies TGST as the primary contributor to the growth in state revenue this year. The tax category also remained the largest source of national income during the most recent reporting period.

Cumulative TGST revenue for the year has reached MVR 6.7 billion, reflecting a 7.7 percent increase, equivalent to MVR 475 million, compared to the MVR 6.2 billion recorded during the same period in 2024. Total GST revenue, comprising both TGST and general Goods and Services Tax (GST), stood at MVR 9.7 billion, representing a 9.0 percent increase or MVR 799.2 million compared to the previous year. GST revenue alone increased by 12.1 percent, rising from MVR 2.7 billion to MVR 3.0 billion.

Total tax revenue collected so far this year amounted to MVR 17.6 billion, marking an 11.3 percent increase, or MVR 1.8 billion, from the MVR 15.8 billion collected during the corresponding period last year. As a result, total revenue and grants reached MVR 23.0 billion. Grant income recorded a significant increase of 130.3 percent, reaching MVR 438.8 million compared to MVR 190.5 million in the previous year. Meanwhile, non-tax revenue declined slightly by 2.9 percent, decreasing from MVR 5.1 billion to MVR 4.9 billion.

Government expenditure during the period reached MVR 24.5 billion, reflecting a 21.0 percent increase, or MVR 4.2 billion, compared to the MVR 20.3 billion spent in 2024. Recurrent expenditure increased by 20.8 percent to MVR 21.4 billion, driven by higher subsidy spending and increased salary expenses following pay harmonisation initiatives. Capital expenditure also recorded growth, rising by 22.1 percent to reach MVR 3.2 billion.

The largest increase in expenditure during the past week was recorded in block grants allocated to local councils. Total grants reached MVR 1.5 billion, representing a 16.0 percent increase, or MVR 200.5 million, compared to the previous year. The Ministry of Finance stated that these funds play an important role in supporting decentralised service delivery and the development of local islands. Expenditure on subsidies also rose significantly, reaching MVR 3.1 billion, an increase of 86.3 percent, or MVR 1.4 billion, from the MVR 1.7 billion spent last year. The report noted that the combined MVR 4.6 billion allocated for council grants and subsidies reflects the government’s continued focus on decentralisation and strengthening social protection programmes.

The budget deficit for the period stood at MVR 1.5 billion, compared to a surplus of MVR 817.3 million recorded during the same period last year. However, the primary balance, which excludes debt servicing and interest payments, remained positive, recording a surplus of MVR 1.2 billion.