2025 budget first to align with IMF guidelines, ministry says

The budget for the upcoming year will be the first in Maldives to align expenditure and revenue with International Monetary Fund (IMF) guidelines, according to Deputy Minister of Finance Ahmed Saaid Musthafa.

He made this announcement during a meeting at the ruling Progressive National Congress (PNC) camp on Monday evening.

Saaid noted that a significant change in the proposed budget is the adoption of measures to control and optimise government spending for public benefit. While similar measures have been discussed in previous years, the next year's budget will incorporate these adjustments following necessary policy groundwork.

Addressing the prioritisation of subsidies, Saaid emphasised the need to better target assistance to those in need. He highlighted long-standing subsidies provided to various sectors, including water and electricity, which have been increasing annually by MVR 3 billion. He pointed out that both the wealthiest and the poorest segments of the population benefit from these subsidies.

“The current system is not ideal, but there has not been a comprehensive plan to reform it,” Saaid stated.

He mentioned that the new budget aims to initiate these reforms, gaining approval from the president's cabinet.

He shared data illustrating the distribution of subsidies:

Saaid described the current allocation system as inequitable and unacceptable, and he emphasised that planned reforms would address the imbalance and curb unnecessary spending. He projected savings of MVR 7.7 billion if expenditure is managed as proposed in the budget.

“The aim is to establish financial and social fairness, aligning government spending with the needs of the people,” Saaid said.

He also remarked that the new budget will focus on housing and reduce inefficient expenditures to serve citizens more effectively.

The budget for the next year is set at MVR 56.6 billion, with estimated grants and revenue of MVR 39.8 billion. Projected expenditures stand at MVR 51 billion, resulting in a deficit of MVR 9.4 billion, the lowest in recent history. The economic growth rate is expected to reach 6.4% in the coming year.