Ministry of Finance has reported a substantial reduction in government spending, with the state maintaining a budget surplus up to 7 August this year.

According to the ministry’s weekly financial update, government expenditure fell by 16.7 percent compared to the same period last year, with the overall budget balance showing a surplus of MVR 1.4 billion. In contrast, the same period in 2024 recorded a deficit of MVR 4.8 billion.

As of last week, MVR 22.3 billion had been allocated from the state budget - 17.4 percent lower than the same period last year. Recurring expenditure declined by 1.1 percent, while capital expenditure recorded a sharp fall of 60.4 percent.

Within recurring expenditure, 56.9 percent was spent on administrative functions, a 5.4 percent drop from last year. Office operation costs decreased by 17.8 percent, repair and maintenance expenses by 19.9 percent, and transportation costs by 5.3 percent. Grants and subsidies issued by the state also fell by 9.1 percent year-on-year.

Capital expenditure reached MVR 2.8 billion, with MVR 2.4 billion directed towards infrastructure assets such as roads, bridges, and airport development, 21.2 percent of the approved annual budget for these projects.

For 2025, the state had allocated MVR 12.4 billion for Public Sector Investment Programmes (PSIP), but only MVR 3.4 billion has been utilised so far. While last year’s PSIP expenditure was largely focused on land acquisition and road projects, this year’s spending has been directed towards addressing infrastructure shortages, with MVR 2.2 billion spent in this area.

Major projects include the completion of works at Velana International Airport (VIA) and various housing initiatives, on which MVR 123.1 million has been spent. The ministry noted that expenditure on housing programmes has declined due to strengthened PSIP-related policies implemented this fiscal year.