Ministry of Finance, on Monday, submitted an MVR 34.7 billion State Budget for 2021 to the parliament.
The allocation represents an MVR 3 billion reduction compared to the MVR 37.8 billion State Budget initially approved for 2020. In response to the economic strains of the COVID-19 pandemic, the 2020 State Budget was reduced to MVR 31.7 billion.
Minister of Finance Ibrahim Ameer stated that the budget was compiled with reference to factors prioritised under the National Resilience and Recovery Plan. He noted that the aforementioned plan outlined focus areas based on the incumbent administration's Strategic Action Plan (SAP) and with consideration to the impact of the ongoing COVID-19 pandemic.
Similar to previous years, the current proposal also carries a deficit, with the 2021 State Budget involving a deficit of MVR 15.5 billion. This represents 23.4 percent of Maldives' GDP.
Budget total: MVR 34.7 billion
Revenue and foreign assistance: MVR 17.8 billion
Total expenditure: MVR 33.3 billion
Deficit: MVR 15.5 billion
Government revenue is divided into three categories, out of which tax will make the greatest contribution at MVR 9.8 billion or 55 percent. Non-tax income will consist of MVR 5.75 billion or 32 percent while foreign aid accounts for MVR 2.2 billion.
The Finance Ministry estimates that a total of USD 696 million will be accumulated in Maldives' national reserve.
- Health sector: MVR 4 billion
- Social welfare: MVR 3.7 billion
- Economic and industrial development: MVR 7 billion
- Housing and community: MVR 2.3 billion
- Education sector: MVR 3.95 billion
- Environmental protection: MVR 1.9 billion
- Defence and security: MVR 4.2 billion
Speaking at the parliament, Finance Minister Ameer emphasized the importance of stimulating economic activities, initiating additional development projects and investing in regional prosperity to the highest extent which is permitted by national finances.
Asserting the importance of controlling the spread of COVID-19, the minister stated that the MVR 4 billion set aside for the health sector demonstrated the area's prioritisation in the compilation of the budget.
The Finance Minister went on to state that the MVR 3.95 billion allocated for education was intended to strengthen the workforce to support the planned efforts concerning economic recovery and expansion.
Notably, a figure of MVR 716 million was proposed to cover the state's housing schemes in the 2021 State Budget. Under this budget allocation, MVR 496 million is earmarked for the national social housing project, while a further MVR 135 million is designated for the establishment of housing units in atolls outside of the capital city of Male'. The remaining MVR 85 million is intended to finance the affordable housing project.
Additionally, a total of MVR 1.2 billion is allotted for the establishment of sewerage systems and water sanitation in 169 islands across Maldives.
"Our aim is to ensure that all islands in Maldives have clean drinking water and a sewerage system by the end of 2021", stated Finance Minister Ameer. He also highlighted the government's target of initiating all such projects during 2021.
The government intends to introduce six new measures to increase national income by MVR 2.5 billion in 2021.
- Telecom license fee changes and the introduction of a frequency spectrum charge: MVR 300 miliion
- Selling land plots to Maldivians: MVR 300 miliion
- Changes to airport development fee and airport service charge: MVR 273 million
- Leasing of land for tourism purposes: MVR 154 million
- Real estate tourism: MVR 154 million
- Introduction of a congestion charge or parking fee in Male' City: MVR 154 million
Similar to previously observed trends, recurrent expenditure is designated as the highest at 62 percent or MVR 21.67 billion. While MVR 8.3 billion is allocated for PSIP projects, MVR 4.8 billion is designated for other capital expenditures.
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