Robust fiscal management, increased non-tax revenues, and a rebound in tourism-related income have led to a notable financial turnaround in the Maldives, with the government recording a budget surplus of MVR 1.57 billion as of May 1, 2025. This positive outcome represents a remarkable shift from the MVR 2.12 billion deficit reported during the same period last year, underscoring the effectiveness of fiscal reform measures introduced by the administration of President Dr. Mohamed Muizzu.
The latest Weekly Fiscal Developments report from the Ministry of Finance and Planning details a disciplined approach to public spending, with government expenditure reduced by 21.3% compared to the first four months of 2024. By the end of April, only 24.3% of the total annual budget had been utilized, reflecting a deliberate and sustained focus on reducing costs across all sectors of government.
A major component of this fiscal prudence stems from a 75.8% reduction in capital expenditure compared to the same period last year, in line with the government’s decision to prioritise Public Sector Investment Programmes (PSIP) that yield long-term economic benefits. Additionally, operating expenses were trimmed by 8.6%, transportation costs by 21.8%, and overall recurrent expenditure was down 3.3%. These efforts are contributing to the creation of a more resilient economic foundation, enhancing investor confidence in the Maldives.
Despite cuts in several spending areas, the government maintained its commitment to public service obligations. Notably, wage and pension expenditures rose by 7.5% due to salary adjustments under the previous administration’s pay harmonisation scheme for security personnel. Even with these increases, the government maintained fiscal stability through strong revenue performance.
Total state revenue stood at USD 875.5 million (MVR 13.5 billion), surpassing expenditure of USD 778.2 million (MVR 12 billion), resulting in a primary surplus of MVR 3.23 billion, a sixfold rise from MVR 449.8 million recorded during the same period in 2024. This surplus excludes financing and interest costs and indicates a healthy fiscal trajectory.
Tourism, the lifeblood of the Maldivian economy, continues to play a central role in this recovery. Tax revenues, which contributed 78% of total earnings, benefited significantly from the Tourism Goods and Services Tax (TGST), General Goods and Services Tax (GGST), and Business and Property Tax. Although overall tax revenue saw a slight year-on-year dip due to early payments of bank profit taxes in 2024, revenues from tourism-related taxes have grown, reflecting the sector’s ongoing recovery and expansion.
Non-tax revenue showed a strong performance, increasing by 32.3% compared to the same period last year. Resort land lease payments alone contributed over 20% of the total revenue, reaffirming the sector’s strategic value. Other key non-tax revenue sources included registration and licensing fees, as well as the Airport Development Fee.
On the expenditure side, the largest outlays were for grants, subsidies, and contributions, particularly in health insurance (Aasandha), local council grants, and social support mechanisms. Ministries utilising the highest shares of the budget were the Ministry of Education, the National Social Protection Agency (NSPA), and the Maldives Police Service, indicating sustained investment in education, social welfare, and national security.
In the first four months of 2025, the government has already secured 34% of the total revenue and grants projected in the annual budget approved by the People’s Majlis. This achievement reflects well on the Muizzu administration’s ability to manage public finances effectively while laying a foundation for long-term economic growth.
For foreign investors, these developments send a clear message: the Maldives is implementing strong fiscal policies, promoting sustainable tourism growth, and ensuring stable macroeconomic conditions. With continued investments in infrastructure, education, and social services, and a renewed focus on reducing budget deficits, the Maldives is increasingly becoming an attractive destination not only for leisure but also for strategic investments.
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