Gov’t Propose MVR 56.6 Billion Budget for 2025

The government has proposed a budget of MVR 56.6 billion for the coming year, prioritising cost-cutting measures, fiscal reforms, and strategic investments in essential sectors.

Finance Minister Moosa Zameer presented the budget on Thursday, detailing the major allocations, anticipated revenues, expenditures, and strategies intended to promote economic growth in 2025.

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The government expects to secure grants and revenues totalling MVR 39.8 billion, while expenditures are projected to reach MVR 51 billion, leaving a deficit of MVR 9.4 billion—reportedly the smallest deficit in recent years. An economic growth rate of 6.4% is forecasted for 2025.

In comparison, the approved budget for 2024 stood at MVR 49.5 billion, later supplemented with an additional MVR 5.5 billion, bringing the 2024 total to MVR 55 billion.

A significant feature of this budget is the highest-ever allocation for the Public Sector Investment Programme (PSIP), with MVR 12.4 billion designated for development projects across various sectors to enhance public services nationwide.

Efforts to reduce spending are also central, with a targeted savings goal of MVR 6.6 billion through specific cost-control strategies. These include transitioning to a targeted subsidy model, ensuring that subsidies effectively reach those in need, alongside a review and reformation of the Aasandha national health insurance scheme to align with sustainable practices. The government is also set to address fiscal and external risks posed by fluctuating oil prices through strategies designed to mitigate their economic impact.

Reforms to state pensions, aiming to avoid redundancy, and the restructuring of State-Owned Enterprises (SOEs) are part of the initiatives aimed at reducing government expenditure and improving efficiency.

To supplement these cost-saving measures, additional revenue is projected to increase by MVR 4.9 billion. The finance ministry has placed a focus on foreign currency sources, with strategies including raising import duties on cigarettes, introducing a bidding system for import permits, increasing airport taxes and associated fees, and updating green tax rates to reflect environmental priorities.

Further revenue-generating steps include a proposed fee for private sand dredging operations and an increase in the Tourism Goods and Services Tax (TGST) rate. The government also intends to apply the destination principle to the Goods and Services Tax (GST) system in alignment with international norms and levying a frequency spectrum charge by introducing fees for the use of certain communication frequencies
According to the finance ministry, fiscal reforms amounting to MVR 11.5 billion are embedded in the 2025 budget. These initiatives are directed towards financial stability and targeted development across key sectors.