The Government recorded a major improvement in its fiscal position in 2025, with the overall budget deficit falling 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 deficit declined by MVR 9.6 billion year-on-year, dropping from MVR 13.1 billion in 2024 to MVR 3.5 billion in 2025. The improvement was driven by higher revenue collection and lower overall expenditure.

Total Government revenue reached MVR 39.6 billion by the end of December 2025, a 12.9 per cent increase from 2024. Although grant assistance fell short of estimates, tax and non-tax revenues exceeded budget expectations by MVR 2.0 billion. Tax revenue rose to MVR 29.2 billion, led by a 15.2 per cent increase in Tourism Goods and Services Tax, while non-tax revenue grew by 24 per cent to MVR 10.0 billion.

Government expenditure declined to MVR 43.1 billion, down 10.6 per cent from the previous year. While recurrent spending increased slightly due to higher staff costs, capital expenditure fell sharply to MVR 6.8 billion, despite continued investment in key infrastructure projects.

The report also showed a strong improvement in the primary balance, which shifted from a deficit of MVR 8.4 billion in 2024 to a surplus of MVR 1.2 billion in 2025, marking the first primary surplus in recent years.

Deposits to the Sovereign Development Fund rose to MVR 2.7 billion, strengthening the country’s ability to meet debt obligations. Tourism remained a key contributor to fiscal performance, with an estimated 2.2 million tourist arrivals and USD 1.2 billion in foreign exchange earnings in 2025.