Govt spending up MVR 4.5 billion despite expenditure cuts

Government recurrent and capital expenditure has increased by MVR 4.5 billion, or 17 per cent, compared with the same period last year, despite measures announced to reduce state spending.

According to the latest figures from the Ministry of Finance and Public Enterprises, the government had spent MVR 30.9 billion on recurrent and capital expenditure as of 3 September, excluding debt repayments and expenditure on Public Sector Investment Programme (PSIP) projects.

The increase represents MVR 4.5 billion more than was spent during the corresponding period last year.

Subsidies recorded one of the largest increases, with expenditure rising by MVR 1.4 billion compared with the same period in 2025. The increase was mainly attributed to higher global oil prices resulting from the war involving Iran, which increased the amount the government had to spend to maintain subsidised fuel prices.

Spending on allowances and financial assistance increased by MVR 750 million, or 68 per cent, while expenditure on employee salaries and allowances rose by MVR 950.3 million, or 11 per cent.

Administrative expenditure associated with running the government increased by MVR 3.1 billion, representing a 24 per cent rise compared with the same period last year.

While recurrent expenditure increased, spending on development projects fell.

The government spent MVR 3.9 billion on development projects under the PSIP during the period. This was MVR 1.6 billion, or 30 per cent, lower than during the corresponding period last year.

Debt servicing has also accounted for a significant share of government expenditure this year.

The government spent MVR 13.2 billion on debt repayments and interest payments, equivalent to about 30 per cent of total government expenditure recorded so far this year.

Parliament approved a MVR 64.2 billion state budget for 2026. Of this, MVR 43 billion had been spent as of 3 September.