Rising salaries could strain Maldives’ fiscal stability: Finance Ministry

Finance Ministry has warned that if spending on public sector salaries continues to rise, it may become difficult to maintain control over overall fiscal expenditure.

Deputy Finance Minister Ahmed Saeed Mustafa told the Parliament’s Budget Review Committee that salary growth under the government’s pay harmonization policy may push personnel costs to unsustainable levels.

Next year’s budget allocates MVR 14.8 billion for salaries and MVR 17 billion including pension payments; nearly a third of total spending.

“If the current salary expenditure continues to exceed targets, we are likely to reach an unsustainable level in containing fiscal expenditure,” Saeed said.

He noted that rising staff costs have constrained funding for economic and development projects, including the Public Sector Investment Programme (PSIP).

Saeed said that the budget includes MVR 7.1 billion in salaries for 54,000 employees, which is around 7,000 more than this year. Next years budget also includes MVR 1.7 billion for pay harmonization, he said.

The government’s MVR 64.2 billion budget proposal for 2026 allocates 30 percent to salaries and allowances, 29 percent to debt repayment, and 62 percent to recurrent expenditure.