State expenditure expanded by 18 percent to reach MVR 35.8 billion through early October, outpacing revenue gains and widening the national budget deficit to MVR 4.12 billion, according to the latest weekly fiscal development bulletin published by the Ministry of Finance.
The rapid expenditure acceleration was driven predominantly by elevated recurrent spending obligations, including public sector wage increases, universal healthcare medical subsidies, and external debt service interest charges.
Expenditure drivers and capital investment
According to the Ministry of Finance, total revenue and grants collected during the period rose by 3 percent to MVR 31.57 billion, supported by healthy growth in General Goods and Services Tax (GGST) receipts and higher import duties.
However, expenditure outstripped revenue inflows as capital spending on the Public Sector Investment Program (PSIP) rose by 16 percent to MVR 4.31 billion, while administrative operational costs expanded:
"Total state expenditure reached MVR 35.80 billion as of October, compared with MVR 30.34 billion recorded during the same period in 2025. The overall budget deficit stands at MVR 4.12 billion," the Ministry of Finance disclosed in its statistical report.
Within revenue streams, Business and Property Tax collections increased by 21.3 percent to MVR 5.80 billion, while Airport Development Fees grew by 9.1 percent to MVR 1.57 billion. Non-tax revenues, however, declined by 12.7 percent due to fewer one-off state enterprise dividends.
Fiscal consolidation and deficit targets
The widening fiscal gap highlights the urgent necessity of structural expenditure reforms committed by the administration, including phasing out blanket electricity and fuel subsidies in favor of targeted social safety nets.
Finance Minister Hassan Zareer reiterated that the ministry is actively enforcing expenditure containment measures, restricting discretionary travel and unapproved state recruitments, while negotiating financing agreements with international multilateral lenders to refinance upcoming commercial loans without destabilizing the national currency.