Budget deficit falls by 73.5% in 2025, finance ministry says

The state budget deficit for 2025 declined by 73.5 per cent compared to the previous year, according to the Weekly Fiscal Developments report released by the Ministry of Finance and Planning.

The report, which sets out revenue and expenditure figures as of 31 December 2025, showed that the overall fiscal deficit fell by MVR 9.6 billion from 2024 levels. The deficit was reduced from MVR 13.1 billion at the end of 2024 to MVR 3.5 billion by the end of 2025. The ministry attributed the change to increased revenue and lower overall expenditure.

Total state revenue and grants reached MVR 39.6 billion by the end of December 2025, representing a 12.9 per cent increase from MVR 35.1 billion recorded during the same period in 2024. The approved revenue and grants estimate for 2025 was MVR 39.8 billion.

Although the budget had projected MVR 2.6 billion in grants, only MVR 415.2 million had been received by year-end. Despite this shortfall, revenue from tax and non-tax sources exceeded budget forecasts by 5.5 per cent, or MVR 2.0 billion.

Total tax revenue amounted to MVR 29.2 billion, up from MVR 26.4 billion in 2024, marking a 10.6 per cent increase. Revenue from Tourism Goods and Services Tax (TGST) reached MVR 11.0 billion, compared with MVR 9.5 billion in the previous year. Non-tax revenue rose to MVR 10.0 billion from MVR 8.1 billion in 2024 and exceeded the approved estimate by MVR 2.0 billion.

Total state expenditure stood at MVR 43.1 billion at the end of December 2025, down from MVR 48.2 billion in 2024, a reduction of 10.6 per cent. Recurrent expenditure increased to MVR 36.3 billion from MVR 34.9 billion in the previous year. The report said the rise was mainly due to policy measures, including the harmonisation of civil service salaries during 2025.

Capital expenditure totalled MVR 6.8 billion, compared with MVR 13.3 billion in 2024, reflecting a decrease of 48.8 per cent. The report noted that capital spending in the final weeks of the year focused on infrastructure projects, including roads, bridges and airport development.

The primary balance, which measures revenue and expenditure excluding interest payments, shifted from a deficit of MVR 8.4 billion in 2024 to a surplus of MVR 1.2 billion in 2025. This marked the first time in recent years that the state recorded a primary surplus.

Contributions to the Sovereign Development Fund (SDF) reached MVR 2.7 billion in 2025, compared with MVR 1.4 billion in 2024. The ministry said the increase was intended to strengthen reserves and support future debt servicing.

Tourism-related tax revenue increased during the year. Tourist arrivals reached 2.2 million in 2025, in line with government projections, while foreign currency revenue from tourism amounted to USD 1.2 billion.