2025 budget debate extended through Thursday

The Parliament on Wednesday voted to extend the preliminary debate on the 2025 projected state budget of MVR 56.6 billion until the end of Thursday.

The 2025 budget was presented to the Parliament by Finance Minister Moosa Zameer on October 31.

The preliminary debate on the budget began on Tuesday.

On Wednesday morning, Speaker Abdul Raheem Abdulla called a vote on extending Wednesday’s sitting until 11:00 pm, and to hold another sitting on Thursday for the debate.

It passed with a unanimous vote of 52.

In previous years, the preliminary budget debate had taken place before the Budget Committee began its review. But this year, the Parliament had appointed a Budget Committee and initiated the review before beginning the debate.

Key budget figures:

• Budget: MVR 56.6 billion
• Expenditure: MVR 49.2 billion
• Recurrent expenditure: MVR 35.9 billion
• Capital expenditure: MVR 13.3 billion
• Revenue and grants: MVR 39.8 billion
• Grants: MVR 2.5 billion
• Debt repayment: MVR 3.9 billion
• Budget deficit: MVR 9.4 billion

The projected budget deficit of MVR 9.4 billion for 2025 is the relatively smallest deficit in recent years. It is equivalent to 7.9 percent of the GDP.

The most pressing concern as the Maldives heads into 2025 is the country’s high debt.

Maldives has an external debt service obligation of about USD 600 million due in 2025, and more than USD 1 billion in 2026 – including a USD 500 million sukuk. Top rating agencies Moody’s and Fitch have both downgraded Maldives’ credit rating citing risk of default.

In its recent in its biannual update released in October, the World Bank said that despite Maldives’ economic growth, the increasing public debt and high fiscal spending, particularly for public sector investments and subsidies, remains worrying.

According to the World Bank, the Maldives' total public and publicly guaranteed debt stood at USD 8.2 billion, or equivalent to 116 percent of GDP, in the first quarter of this year. The Finance Ministry estimates it will rise to 118 percent of the GDP at the end of the year.

But despite the concerns, the Maldivian administration has provided assurance it will honor its debt obligations to creditors and investors. It has also implemented measures aimed at alleviating the situation, including reducing the number of political appointees, reforming the Aasandha public health insurance scheme and raising taxes.

The administration plans to roll out more fiscal reforms in 2025, including more Aasandha reforms, and reforms of subsidies, welfare schemes, and State-Owned Enterprises.