MVR 22 billion will be added to debt with proposed supplementary budget

Auditor General's Office has said that the proposed supplementary budget will result in adding MVR 22 billion to this year's debt.

In the advice they submitted to the parliament regarding the supplementary budget, the office stated that with the supplementary budget, 40 percent of the total budget will be financed via loans, hence increasing total debt by MVR 22 billion.

This amount is the total when the budget deficit and debt repayment expenses are considered.

"A total of an additional MVR 8.5 billion will need to be sought as financing beyond the determined amount in the medium term fiscal and debt strategy," the office said.

The Auditor General's Office said that initially, MVR 18 billion was set as budget financing. This is 36 percent of total budget. While MVR 4.3 billion is set to be sough as financing for the supplementary budget, MVR 2.9 billion of this is marked to be sought through the domestic market.

The office pointed out that government's reliance on domestic financing over international financing has markedly increased. They highlighted the importance of gauging the effect this has on private sector financing.

While debt increases, 79 percent of the projected revenue until September has been received. While revenues of MVR 32 billion are projected for the year, MVR 26 billion has been received to date.

They went on to note that although MVR 1.5 billion has been marked as free grant in the budget, so far only MVR 630 million has been received. Failure to receive the amount marked as free aid would further exacerbate challenges in seeking financing.

The government has proposed to parliament a supplementary budget of MVR 5..1 billion.