Institutions’ salary demands could strain budget, ministry says

Deputy Minister of Finance Ahmed Saaid Musthafa said on Thursday that if spending on employee salaries—particularly within independent institutions—continues to rise beyond budgeted levels, the state’s fiscal expenditure could become difficult to control.

Speaking before the Parliamentary Budget Review Committee, Saaid said increased spending on salaries has reduced the capacity of institutions to allocate funds for legally mandated functions.

He said many agencies seek to expand their workforce without considering long-term fiscal implications.

“Looking at the past 15 years in the budget books, the number of employees has increased significantly. This has reduced the share of expenditure available for economic sectors,” he said.

Saaid cited the recent approval granted to Maldives Customs Service to recruit additional staff in connection with the opening of the new terminal at Velana International Airport as an example of rising personnel costs.

He said the Finance Ministry has attempted to introduce performance-based budgeting for several years, but has not received adequate technical cooperation from institutions.

Saaid warned that the recurring expansion of staff numbers places a heavy burden on the state.

“If salary expenditure exceeds current estimates, controlling overall fiscal expenditure may become impossible,” he said.

Next year’s budget includes MVR 40 billion in expected revenue and MVR 17 billion allocated for salaries.

Saaid said that while staff numbers may increase or decrease, it is essential to ensure that salary expenditure remains within planned limits.