The Maldives’ government finances recorded an overall deficit of MVR 975.9 million by early July 2026, as expenditure increased at more than twice the rate of revenue and grants, reversing the fiscal surplus reported during the corresponding period of the previous year.
Cumulative government revenue and grants reached MVR 22.40 billion between 1 January and 2 July 2026, representing an increase of 10.4 per cent from MVR 20.29 billion recorded during the same period in 2025. Government expenditure, meanwhile, rose by 21.7 per cent to MVR 23.38 billion.
The latest figures indicate a significant change in the country’s fiscal position compared with the previous year. By 2 July 2025, the government had recorded an overall surplus of MVR 1.07 billion. The transition to a deficit in 2026 represents a deterioration of more than MVR 2 billion in the overall fiscal balance over the past year.
Tax revenue remained the principal source of government income, increasing by 13 per cent to MVR 17.25 billion. Goods and Services Tax collections rose to MVR 9.58 billion, supported primarily by the tourism sector. Tourism Goods and Services Tax generated MVR 6.63 billion, while General Goods and Services Tax contributed MVR 2.95 billion.
The strong contribution from tourism-related taxation continues to demonstrate the importance of the Maldives’ resort and hospitality industry to national revenue. The country’s internationally recognised tourism sector, which includes luxury island resorts, guesthouses, hotels, liveaboards and other tourism-related businesses, remains a central component of economic activity and government income. Revenue generated from tourism supports public services, infrastructure development, social programmes and other national expenditure priorities.
Import duty collections increased by 13.9 per cent to MVR 1.73 billion, reflecting higher revenue from goods entering the country. Business and property tax collections rose to MVR 3.52 billion, while income received through Green Tax and airport service charges also increased compared with the corresponding period of 2025.
Green Tax revenue is closely connected to the tourism industry and is collected from tourists staying at resorts, hotels, guesthouses and tourist vessels. The revenue supports the government’s environmental protection and sustainability objectives, which are particularly important for an island nation facing climate-related and ecological challenges.
Despite the overall growth in government income, non-tax revenue declined by 2.8 per cent to MVR 4.72 billion. Revenue from fees and charges decreased by 15.3 per cent, while dividends received from state-owned enterprises fell from MVR 411.2 million during the same period last year to MVR 340.3 million in 2026.
Recurrent expenditure represented approximately 87 per cent of total government spending and increased by 20.4 per cent to MVR 20.33 billion. Salaries, wages and pensions reached MVR 7.99 billion, reflecting the government’s continuing obligations relating to public-sector employment, pension payments and other personnel-related expenses.
Administrative and operational expenditure rose by 27.1 per cent to MVR 12.28 billion. These expenses include the costs associated with maintaining government services, operating public institutions and delivering programmes across the country’s geographically dispersed islands.
Subsidy expenditure was one of the largest contributors to the rise in recurrent spending. Government expenditure on subsidies increased by 92.4 per cent, rising from MVR 1.49 billion during the corresponding period of 2025 to MVR 2.87 billion in 2026. Total expenditure on grants, contributions and subsidies reached MVR 6.78 billion.
Subsidies remain an important element of public expenditure in the Maldives, particularly in supporting essential goods and services for households and businesses. However, the substantial increase in subsidy spending has also contributed to the widening gap between government revenue and total expenditure.
Capital expenditure increased by 30.9 per cent to MVR 3.05 billion, indicating higher overall spending on assets and development-related activities. However, expenditure under the Public Sector Investment Programme declined by 12.9 per cent to MVR 2.91 billion compared with the same period of the previous year.
The Public Sector Investment Programme finances infrastructure and development projects across the Maldives, including projects relating to transportation, housing, utilities, public facilities and services in island communities. Changes in expenditure under the programme may reflect project implementation schedules, payment timing and the completion or commencement of individual projects.
Although the overall fiscal balance moved into deficit, the government maintained a primary surplus of MVR 1.67 billion. This means government revenue remained sufficient to cover expenditure before financing and interest costs were included.
Financing and interest-related costs amounted to MVR 2.64 billion, which shifted the fiscal position from a primary surplus to an overall deficit. The figures underline the increasing impact of debt servicing and financing obligations on the government’s financial position.
Loan repayments, which are recorded separately from government expenditure, rose substantially from MVR 3.28 billion during the same period in 2025 to MVR 8.99 billion in 2026. The increase reflects the government’s repayment obligations on previously obtained domestic and external financing.
Government securities outstanding stood at MVR 97.45 billion as of 29 June 2026. Domestic instruments accounted for MVR 95.91 billion of the total, demonstrating the significant role of the domestic financial market in supporting government financing requirements.
The Ministry of Finance and Public Enterprises stated that the expenditure figures represent transactions that have been posted in the government’s financial system but may not yet have been settled through cash payments. The Ministry also noted that revenue and expenditure figures remain subject to change as financial reconciliation and verification processes continue.
The fiscal figures highlight the importance of maintaining revenue growth while managing recurrent expenditure, subsidy costs, financing requirements and debt repayment obligations. Continued strength in tourism-related revenue, together with effective expenditure management and broader economic activity, will remain important to the Maldives’ fiscal performance during the remainder of 2026.
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