Gov't to propose supplementary budget as expenditure runs high

The Finance Ministry has predicted that the government's expenditure will surpass the forecast for this year and has said a supplementary budget will have to be submitted to cover the increasing costs.

The Ministry of Finance's Fiscal Strategy Statement for 2025-2023 forecasts expenditure at MVR 39.7 billion. This is a 16.5 percent increase over the previous estimate. Therefore, while a supplementary budget will be required to cover the increased expenses, the cost of other government programs will also have to be reduced significantly.

The main reasons for the increase in expenditure include changes in government policies, a rise in oil prices in the global market due to the Russia - Ukraine war, delays in implementing measures proposed to enhance and strengthen expenditure, and more support being required by government companies.

The Finance Ministry said spending on aid and subsidies is expected to increase significantly this year. The oil subsidy was budgeted at MVR 341.5 million this year, but as of June this year, MVR 977.5 million had been spent for the purpose. The fuel subsidy is now estimated to run at MVR 1.9 billion by the end of this year.

Although MVR 730.9 million was budgeted for the national health insurance scheme Aasandha this year, MVR 874.6 million had been spent on Aasandha as of June this year. It is estimated that Aasandha costs would run at MVR 1.6 billion by the end of the year.

Earlier in 2021, the government sought approval for a supplementary budget of MVR 2.2 billion for that year. The supplementary budget was proposed to the Parliament along with the budget for 2022. Therefore, the supplementary budget for this year is expected to be presented to Parliament along with the state budget for the upcoming year.

The total budget for the current year is MVR 37 billion. The government is expected to receive MVR 24.3 billion in revenue, while expenditure is expected to be MVR 34.1 billion this year. However, the total debt will be higher than that logged in the budget book as the revenue will not be as high as the Finance Ministry had forecast this year. By the end of September, the national tax agency, MIRA, received MVR 16.6 billion as revenue.