Government spending on higher education student loan schemes has fallen by more than 53 per cent compared with the same period last year, according to the Ministry of Finance’s latest Weekly Fiscal Development Report.
The report, published on Friday, shows that MVR 121.8 million had been disbursed under the student loan scheme as of 2 July, down from MVR 262.8 million during the corresponding period in 2025.
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Despite the decline in spending, the state budget allocated MVR 776.6 million for the student loan scheme this year. The amount disbursed so far represents only a small proportion of the approved allocation.
The reduction in student loan disbursements also contributed to a significant fall in expenditure under the state’s lending category. Spending in this category declined from MVR 1.44 billion during the same period last year to MVR 464.0 million this year.
The report shows that overall government expenditure has continued to increase, resulting in a wider fiscal deficit. As of 2 July, the overall fiscal balance recorded a deficit of MVR 975.9 million, compared with a surplus of MVR 1.07 billion during the same period last year.
The increase in the deficit was driven mainly by higher recurrent expenditure. Recurrent spending rose from MVR 16.9 billion to MVR 20.3 billion over the year.
Administrative and operational expenses totalled MVR 12.3 billion, while expenditure on salaries, wages and pensions increased to MVR 7.99 billion.
Capital expenditure also increased, rising from MVR 2.33 billion during the same period last year to MVR 3.05 billion this year.
Debt servicing costs placed additional pressure on public finances. Expenditure on loan repayments increased from MVR 3.28 billion to MVR 8.99 billion compared with the corresponding period in 2025.
On the revenue side, total revenue and grants increased from MVR 20.3 billion to MVR 22.4 billion, supported largely by higher tax collections, which reached MVR 17.3 billion.
The report indicates that the growth in government expenditure and debt repayment obligations has significantly outpaced the increase in state revenue, contributing to the deterioration in the fiscal balance.
