Ministry of Finance, on Monday, proposed an estimated MVR 37.5 billion as the State Budget for 2020 to the parliament.
Minister of Finance Ibrahim Ameer stated that the 2020 State Budget, which is greater than the 2019 budget by MVR 8.5 billion, is geared to attaining five key objectives as per the government's Strategic Action Plan (SAP). The proposed budget categorises expenditure under eight sections.
The 2020 State Budget will also carry a deficit of MVR 5.6 billion.
Budget total: MVR 37.5 billion
Revenue: MVR 29.9 billion
Deficit: MVR 5.7 billion
Overall expenditure: MVR 35.6 billion
Government revenue is divided into five categories, out of which tax will make the greatest contribution at MVR 17.8 billion or 48 percent. Non-tax income will consist of MVR 6.8 billion while foreign aid accounts for MVR 5.2 billion.
Similar to previously observed trends, recurrent expenditure is designated as the highest at 59 percent or MVR 22.2 billion. While MVR 10 billion is allocated for PSIP projects, MVR 5 billion is designated for other capital expenditures.
Unlike previous years, the 2020 State Budget was compiled to complement aims set out in the SAP publicized by the government in October. The plan includes pledges made under the manifesto of the current administration.
Blue Economy: 11 percent
Caring State: 33 percent
Dignified Families: 10 percent
Good Governance: 30 percent
'Jazeera Dhiriulhun': 16 percent
GDP growth in 2020 is estimated at 7.5 percent compared to a figure of 5.2 percent experienced in 2019. Remarking on the health of the sector, the Finance Ministry assured that tourism growth in the upcoming year could be maintained at 2.6 percent.
Additionally, the construction industry is expected to grow by 1.1 percent despite slowdowns recorded this year. Statistics also demonstrate that other sectors will experience real GDP growth of 3.8 percent.
The 2020 State Budget estimates that the rate of inflation will decrease and that it can be maintained at 1 percent.
The national reserve is also predicted to increase by MVR 819 million in the following year.
While a current account deficit of MVR 1.2 billion or equivalent to 19 percent of the GDP will be accrued in 2020, nominal GDP is expected to reach MVR 97.5 billion.
The government intends to introduce five new measures to increase national income by MVR 2.5 billion in 2020.
- Introducing a quota fee for expatriate workers and increasing work permit fees: MVR 714 million
- Income tax and related taxes: MVR 706 million
- Changes to customs fees and import duties: MVR 558 million
- Changes to airport fees and the airport development fee: MVR 319 million
- Acquisition cost from newly leased resorts: MVR 290 million
According to the Finance Ministry, the state will sell T-bills and T-bonds in the domestic market to cover the budget deficit. It is estimated that MVR 564 million will be received through the sale of bills and bonds. Furthermore, sovereign bonds will be sold to foreigners and loans will be acquired.
The Finance Ministry also revealed plans to disburse MVR 3 billion taken as loans to fund projects budgeted for 2020.
In order to achieve the state budget, the government will sell bonds worth USD 300 million (MVR 4.6 billion).