Finance Minister Presents MVR 64.2 Billion Budget for 2026 to Parliament

The Minister of Finance, Moosa Zameer, today presented the 2026 national budget to Parliament, outlining a total expenditure of MVR 64.2 billion and projected revenue of MVR 40.4 billion. The budget highlights the government’s priorities for the year ahead, focusing on public services, infrastructure development, and debt management amid persistent fiscal challenges.

Revenue and Income

The government expects to raise MVR 31.3 billion in tax revenue, mainly from the Goods and Services Tax (GST), business and property taxes, and import duties. Non-tax income, which includes administrative fees and dividends from state-owned enterprises, is forecast at MVR 8.7 billion, while foreign grants are projected at around MVR 373 million.

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In his address to the People’s Majlis, the Finance Minister said the government remains committed to strengthening domestic revenue collection and improving fiscal transparency to ensure sustainable public finances.

Spending and Priorities

The proposed budget allocates MVR 39.9 billion for recurring expenses — around 62 per cent of total spending — marking a 3.3 per cent increase compared with this year’s budget. The largest allocations are directed towards education, healthcare, and social protection, which together account for nearly MVR 9 billion.

Capital expenditure for 2026 amounts to MVR 9.3 billion, much of which will go towards infrastructure development, including housing, transport, and climate resilience projects. The government has also pledged continued support for local councils to promote regional development and community-based initiatives.

The Finance Minister noted that government spending this year is expected to be lower than initially forecast, due to cost-cutting measures. “Although the approved budget for this year was MVR 56.5 billion, we now estimate actual expenditure to reach MVR 56.4 billion,” he said, attributing the reduction to tighter spending controls.

Debt and Deficit

The 2026 budget projects a fiscal deficit of MVR 8.8 billion, equivalent to 7.1 per cent of GDP. Public debt is forecast to rise to MVR 158.8 billion, or 127.6 per cent of GDP, with domestic borrowing accounting for roughly 45 per cent and external debt making up the rest.

Interest payments are expected to increase to MVR 5.6 billion, reflecting the rising cost of debt servicing. The Finance Minister said that debt management remains a central fiscal concern, adding that the government plans to meet its obligations through prudent borrowing and improved expenditure efficiency.

He explained that the main reason for the rise in the 2026 budget is the repayment of international bonds. The government is due to repay USD 500 million (MVR 7.7 billion) from a bond issued in 2021 and an additional USD 100 million (MVR 1.5 billion). Excluding these repayments, he noted, the core budget is lower than this year’s total.

This year, MVR 8.3 billion has already been allocated for debt repayments, reflecting the government’s effort to reduce external liabilities.

Outlook for 2026

The economy is projected to continue its gradual recovery, with nominal GDP expected to reach MVR 124.5 billion next year. Growth is anticipated to be driven by tourism, construction, and trade, with the government forecasting moderate expansion alongside efforts to consolidate public finances.