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Expenses of state increase to MVR17.8 bil, revenues sluggish

Mohamed Rehan
06 July 2022, MVT 20:19
Minister of Finance Mr. Ibrahim Ameer during a recently held press conference revealed plans by the government to bump GST rates effective from 2023--
Mohamed Rehan
06 July 2022, MVT 20:19

According to the most recent Weekly Fiscal Development update from the Ministry of Finance, the cumulative state expenditure has reached MVR17.8 billion as of June 30.

While the state expenditure continued to climb up noticeably, revenues earned by the government remained sluggish in growth pace.

By the same review date, state had earned a cumulative total of MVR13.1 billion in revenues inclusive of foreign grants.

Meanwhile, the overall balance for the period is a deficit of MVR4.7 billion owing to higher spending against revenues earned.

The cumulative total of tax revenues as of June 30 reached MVR9.6 billion while the cumulative total of non-tax revenue reached MVR3.5 billion.

Comparing the same period of 2021, tax revenue in cumulative total was observed at MVR7.2 billion while the non-tax revenue in cumulative total was at MVR2.3 billion.

State's recurrent expenditure by the review date reached MVR13.5 billion while capital expenditure hit MVR4.3 billion.

So far, state has settled MVR2.0 billion in loan repayments, while it had transferred MVR383.7 million to the Sovereign Development Fund (SDF) during the review week.

The current fund size of the SDF was reported at MVR4.4 billion, while the SDF bank balance was reported at MVR1.4 billion.

In terms of earnings, Goods and Services Tax (GST) remains as the strongest compound tax category. Earnings from both General Goods and Services Tax (GGST) and Tourism Goods and Services Tax (TGST) were collectively reported at MVR5.5 billion by June 30.

The tax revenue details for major tax categories are as follows;

- TGST - MVR3.9 billion

- GGST - MVR1.6 billion

- Import Duties - MVR1.3 billion

- Business Profit Tax (BPT) - MVR705 million

- Green Tax - MVR541 million

The non-tax revenue details for major non-tax categories are as follows;

- Rent from Resorts - MVR1.1 billion

- Airport Development Fee - MVR412 million

- SOE Dividends - MVR210 million

GST remains as the strongest tax revenue stream to the state, while the government recently announced plans to increment both GST components in 2023.

The Minister of Finance recently revealed ongoing discussions and efforts to bump GGST from 6 to 8 percent and TGST from 12 to 16 percent from the following year.

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