The 2017 State Budget of MVR 26.8 billion with a projected revenue of MVR 21.9 billion was proposed to the parliament floor on Tuesday.
Speaking at the parliamentary session, finance minister Ahmed Munawar stated that MVR 22.2 billion of the budget is allocated for government expenditure, of which 50.7 percent is capital costs and 49.3 percent is recurrent expenditure.
The finance minister explained that next year’s state budget is divided into four main categories with MVR 7.2 billion (26.7 percent) for public service expenditure, MVR 10.3 billion (40.2 percent) for social development, MVR 3.5 billion (12.5 percent) for economic development and MVR 5.9 billion (20.6 percent) for loans.
While the majority of recurrent expenditure with MVR 6.8 billion (50.2 percent) is allocated for state employees, MVR 1.4 billion (10.6 percent) is proposed for pension funds and retirees with MVR 1.2 billion for subsidies and aid.
MVR 8 billion for Public Sector Investment Programme (PSIP)
With 50.2 percent, total MVR 8 billion of capital costs is allocated for PSIP projects. While the state budget shares of it are at 54.6 percent, the remaining 45.4 percent is to be covered via aid and loans.
According to Minister Munawar, the projected state revenue for the next year is MVR 21.9 billion with MVR 14.1 billion from taxes, MVR 4.8 billion from other income, MVR 878 million from free financial aid and MVR 2 billion from proposed revenue generating projects.
The minister stated that next year’s deficit is estimated to be MVR 303.7 million, which is five percent of the Gross Domestic Product (GDP).
State Revenue 2017
Total: MVR 21.9 billion
Taxes: MVR 14.1 billion
Income sans taxes: MVR 4.8 billion
Free financial aid: MVR 878 million
Proposed income generating projects: MVR 2 billion
Meanwhile, this year’s state budget had projected MVR 27.5 billion. The projected revenue from free aid for this year is MVR 22.8 billion, which includes MVR 16.8 billion from taxes, MVR 3.7 billion from other income, MVR 1.5 billion in free financial aid and an additional MVR 4 Billion from proposed revenue generating projects.
However, the finance minister estimated the revenue of this year will be MVR 18.2 billion. While the amount is an increase of 4.9 percent from last year’s final revenue of MVR 17.3 billion, it falls MVR 2 billion (3.1 percent) short of the projected amount in State Budget 2016. Accordingly, revenue from taxes by the end of this year will be MVR 13.1 billion, MVR 4.5 billion from other income, MVR 132.1 million from trust funds and MVR 874.9 million from free financial aid.
Two amendments were made to parliamentary regulations on the state budget last year. The first annulled the clause stating that the parliamentary debate must commence within seven days of submitting the state budget, revising the rule to commence the debate from the day of submission itself. The second amendment annulled the rule that further information regarding the budget can be requested from the finance minister only seven days after submission, instead allowing requests to be made as the parliamentary debate proceeds.
While the parliamentary debate over the state budget is scheduled for next Monday, the budget review committee will hold its first meeting on Tuesday.