Maldives’ budget deficit increases to MVR 4 billion

Finance Ministry records show Maldives’ budget deficit has increased to MVR 4 billion.

The weekly fiscal report released by Finance Ministry on Wednesday shows Maldives’ budget deficit increased to MVR 4 billion by the end of May.

The records show the state earned MVR 6 billion in revenue and grants from January 1 to May 28, but the expenditure exceeded the income at MVR 10.1 billion, resulting in a deficit of MVR 4 billion.

MVR 6.4 billion of the total MVR 10.1 billion incurred as expenditure was spent on recurrent expenditure, while MVR 2.5 billion was spent on capital expenditure.

The 10.1 billion incurred as expenditure by May 28 this year is MVR 2 billion that the MVR 12 billion in expenditure incurred over the same period last year.

Meanwhile, the MVR 6 billion in income is MVR 3.82 billion less than the MVR 9.10 billion in income the country earned during the same period last year, resulting in a MVR 4 billion deficit.

The state has spent MVR 4.1 billion on salaries and allowances and MVR 3.3 billion on administrative expenses so far this year.

Maldives, prior to the coronavirus pandemic, had been projected to earn MVR 29 billion as income this year. But the Finance Ministry now expects the income to suffer a heavy blow this year, and has decided to cut unnecessary state expenditures by at least MVR 1 billion.

The state earned MVR 5 million in tax revenue, down by approximately MVR 2 billion compared to the same period last year due to the drastic reduction in Tourist GST earnings due to resort closures, and the extension on tax deadlines due to government office closure.

Maldives had passed a projected budget of MVR 37 billion for the year. But the Finance Ministry, following the coronavirus pandemic, revised its earlier projections, and now warns the country is expected to earn MVR 15 billion as income this year, instead of the previously projected MVR 29 billion.

The country has announced plans to reopen its borders to tourists in hopes of reviving its economy in July.