Gov’t Records MVR 976 Million Deficit by Early July

Government finances moved into deficit by early July as expenditure grew at more than twice the rate of revenue, reversing the surplus recorded during the same period last year.

Cumulative revenue and grants reached MVR 22.40 billion between 1 January and 2 July 2026, an increase of 10.4 per cent from MVR 20.29 billion a year earlier. Expenditure rose by 21.7 per cent to MVR 23.38 billion, resulting in an overall deficit of MVR 975.9 million.

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The government had recorded a surplus of MVR 1.07 billion by 2 July 2025, indicating a deterioration of more than MVR 2 billion in the fiscal balance over the past year.

Tax collections remained the main source of revenue, increasing by 13 per cent to MVR 17.25 billion. Goods and Services Tax revenue rose to MVR 9.58 billion, including MVR 6.63 billion from Tourism Goods and Services Tax and MVR 2.95 billion from General Goods and Services Tax.

Import duty collections increased by 13.9 per cent to MVR 1.73 billion, while business and property taxes rose to MVR 3.52 billion. Revenue from Green Tax and airport service charges also increased compared with the corresponding period of 2025.

However, non-tax revenue declined by 2.8 per cent to MVR 4.72 billion. Fees and charges fell by 15.3 per cent, while dividends received from state-owned enterprises declined from MVR 411.2 million to MVR 340.3 million.

Recurrent expenditure accounted for 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, while administrative and operational expenses rose by 27.1 per cent to MVR 12.28 billion.

Subsidy expenditure was among the largest contributors to the increase, rising by 92.4 per cent from MVR 1.49 billion to MVR 2.87 billion. Total spending on grants, contributions and subsidies reached MVR 6.78 billion.

Capital expenditure increased by 30.9 per cent to MVR 3.05 billion. Despite this increase, expenditure under the Public Sector Investment Programme declined by 12.9 per cent to MVR 2.91 billion.

The government maintained a primary surplus of MVR 1.67 billion, meaning revenue remained sufficient to cover expenditure before financing and interest costs. Financing and interest costs of MVR 2.64 billion pushed the overall fiscal balance into deficit.

Loan repayments, which are recorded separately from expenditure, rose from MVR 3.28 billion during the same period last year to MVR 8.99 billion. Government securities outstanding stood at MVR 97.45 billion as of 29 June, of which MVR 95.91 billion consisted of domestic instruments.

The Ministry of Finance and Public Enterprises noted that expenditure figures represent transactions that have been posted but may not yet have been settled in cash. Revenue and expenditure figures may also change as reconciliation work continues.