A Parliament Committee on Monday approved the MVR 5.1 billion supplementary budget as proposed by the state.

Following a review of the budget by the committee as well as discussions with the Finance Minister, including senior officials at the AG Office and MMA, committee member Qasim Ibrahim moved to approve the budget as proposed. The decision was supported by Velidhoo MP Mohammed Abbas.

The budget was passed unanimously by the members present in the committee.

With the inclusion of this supplementary budget, the overall budget deficit will rise to MVR 18 billion.

A significant portion of the proposed budget is allocated to Public Sector Investment Program (PSIP) projects. Of the MVR 5.1 billion, MVR 2 billion is earmarked for these projects.

Key components of the supplementary budget include:

  • PSIP projects: MVR 2 billion
  • Subsidies (fuel, staples, electricity, water, and sewerage): MVR 1 billion
  • Student loans: MVR 458 million
  • State-owned enterprises (SOEs): MVR 441 million
  • National Social Protection Agency (NSPA): MVR 263 million
  • Medical consumables: MVR 200 million
  • Salaries: MVR 24 million

The Ministry of Finance explained that the large allocation for PSIP projects is necessary due to overspending on some initiatives, as the original budget for this year did not include realistic estimates.

The additional funding for SOEs is needed to support new projects and to provide capital for the newly established development bank, which required MVR 150 million to begin operations.

The increase in student loan funding reflects the government's decision to issue more loans than initially planned under the program.

The rise in subsidy costs is attributed to the delay in implementing subsidy reforms. With the initial budget allocating MVR 2.8 billion for subsidies, the extra allocation brings the total to MVR 3.8 billion.

When this year's budget was first proposed, the government had indicated that reform measures could save MVR 2.5 billion. However, since those measures were not implemented, the total budget may now reach MVR 55 billion, up from the initially approved MVR 49.5 billion.

As of now, the Finance Ministry reports that MVR 39.2 billion has been spent. If an additional MVR 640 million is collected as revenue, the total revenue for the year is projected to reach MVR 34 billion.