Grant assistance received by state sees 63 percent decline

Grant assistance received by the state has seen a 63 percent decline.

Finance Ministry published the latest statistics on state revenue and expenditure on Wednesday, accounting for the period from January 1^st and May 1^st.

According to the statistics, the state earned MVR 13.5 billion in revenue and grant assistance during this period. This marks a 3.47 increase compared to the same period last year, where the amount stood at MVR 13.1 billion.

While the government has projected to secure MVR 39.8 billion as grant assistance in this year’s state budget, only 34 percent of the projected amount has been received almost halfway into the year.

In this regard, the government has only received MVR 81 million as grant assistance as of May 1^st – a 62.8 percent decrease compared to the MVR 219.4 million received as grant assistance during the same period last year.

The government projected to receive MVR 2.59 billion as grant assistance in the first four months of this year. However, the government has only received 3.16 percent of the projected amount.

Tax revenue also saw a decline during this period, with the government collecting MVR 10.6 billion compared to MVR 10.7 billion during the same timeframe last year — a decrease of 1.03 percent.

Finance Ministry cited the main reason behind this decline as some banks settling the bank profit tax due this year in advance last year. Nevertheless, the Ministry highlighted an increase in tourism related taxes which the Ministry attributed to further development of the industry and recent reforms by the government to tourism sector tax rates.

The government collected MVR 733 million in Green Tax during this period, reflecting a significant 73.7 percent increase compared to the MVR 422.1 million collected in the same period last year.

MVR 538.2 million was collected as Departure Tax, marking a 31.9 percent increase compared to the MVR 408.1 million collected in the same period last year

MVR 4.5 billion was collected as Tourism Goods and Service Tax (TGST), marking a 4.28 percent increase compared to the MVR 4.28 billion collected in the same period last year

Although tax revenue declined during this period, non-tax revenue saw a 32.3 percent increase. The government collected MVR 2.89 billion in non-tax revenue this year, up from MVR 2.18 billion during the same period last year.

The highest contributor of non-tax revenue is rent from resorts at MVR 582 million, marking a 20.1 percent increase compared to the MVR 545 million collected last year.

During this period, total state expenditure amounted to MVR 12 billion, marking a 21.3 percent decrease compared to the same period last year, when expenditure stood at MVR 15.2 billion. The decrease in expenditure has been attributed to stalled projects.

Nevertheless, the expenditure on salary and allowances have increased by 7.5 percent; something which the Finance Ministry attributed to the increase salaries of soldiers and police under the government’s pay harmonization initiative.

Last year's state budget projected MVR 1.47 billion in grant assistance; however, less than half of that was actually received, with the government securing only MVR 660 million. This marks a decline compared to 2023, when MVR 1.02 billion in grant assistance was received.

Maldives' critical fiscal situation has led international financial institutions to urge the government to cut spending and diversify the economy. They have warned that failure to do so could result in the Maldives defaulting on its debt obligations.