Towards the end of 2022, the budget for the upcoming year 2023 for the Maldives was announced during a Parliament sitting. The budget, which was set at MVR 42.6 billion was definitely a big number, however, the aim of the budget for 2023 was said to be mainly targeted towards maintaining economic growth and ensuring fiscal and debt sustainability.
Following the COVID-19 pandemic, the budget set for 2021 as well as 2022 mainly focused around the cost of recovering from the pandemic, and finally the budget set for 2023 included bringing the positive changes that the economy needed in order to fully recover from the outcomes of the pandemic.
In addition to the negative effects of the pandemic, Maldives was also looking at an increasing debt situation which resulted in the Government taking measures such as increasing the GST and the TGST at the start of 2023 in order to meet the growing expenditures. With this, the budget for 2023 was also targeted at paying off this increasing debt by aiming to reduce it to less than 5 percent of the GDP and settling the inconsistencies within the economy.
While the end of 2022 and the budget set for 2023 was all talks of expenditure reduction measures, such as cutting down the state expenditure, it appears that the budget for the year is yet again close to running out.
The Finance Ministry of the Maldives has revealed that by September 14, 2023, the state has spent MVR 33.1 billion, leaving only MVR 9.7 billion for the remainder of the year. To put things into perspective, in order to spend what amounts to 77 percent of the budget by September 14th, the Government has spent around MVR 129.2 million each day.
Now the question is if the Government was focused on reducing the expenditure and paying off the increasing debt of the country, how has the Government reached the point of needed to add on to the budget three months before the end of the year?
Two of the main reasons that can be outlined for the increased spending by the Government includes the Government having to spend over-budget for the subsidies as well as the increased Public Sector Investment Program (PSIP) for the year.
Some of the sectors that took up a big chunk of the budget includes the health sector as the expenditure on the national insurance policy Aasandha was MVR 424 million more than budgeted, the budget set for projects run by the Housing Ministry increased by MVR 678 million more than the budget as well as the budget set for other projects going MVR 2.6 billion over budget.
With this, the Government may now be looking at seeking a supplementary budget. With this, the Government would be seeking an additional MVR 5 billion in addition to the budget that was passed for 2023, which might result in the budget for 2023 coming to a total of MVR 49 billion. This is, however, not the first time that the Government sought out an addition to the approved budget, as the Government carried out the same addition in 2022 as well.