The Government has proposed a MVR 64.2 billion State budget for 2026, with projected revenue and grants amounting to MVR 40.2 billion and total expenditure estimated at MVR 49.2 billion.

The 2026 budget, amounting to MVR 64,202,565,720, is the largest one-year budget in the nation’s history. Presenting it to Parliament, Minister of Finance and Planning Moosa Zameer said the increase is primarily driven by higher debt repayment obligations.

According to Minister Zameer, the Government will allocate USD 600 million (MVR 9.3 billion) next year to repay external debt, including USD 500 million in sukuk issued in 2021 and a USD 100 million bond issued earlier. “When excluding the inherited sukuk and bond repayments, the budget amounts to around MVR 55 billion, lower than the 2025 State budget,” he said.

The budget projects a gradual reduction in overall expenditure in the medium term, with forecasts of MVR 56.8 billion for 2027 and MVR 57 billion for 2028.

Recurrent expenditure accounts for MVR 39.9 billion, or 62 per cent of next year’s budget. Minister Zameer said the increase in recurrent costs is mainly due to the Government’s pay harmonisation policy, which will adjust the salaries of all public sector employees by next year.

Total revenue for 2026 is expected to reach MVR 40.3 billion, comprising MVR 31.3 billion in tax revenue, MVR 8.7 billion in non-tax revenue, and MVR 373.6 million in grants, representing a 6.6 per cent increase compared to this year’s estimates.

The Finance Minister said stronger tourism growth and improved airport operations will play a key role in boosting revenue next year. “The new terminal at Velana International Airport, which opened this year, is expected to become fully operational in 2026. Together with the expansion of regional airports and increased tourism activity, this will significantly raise collections from Tourism GST, Green Tax, airport taxes and fees,” he said.

Airport development fees alone are expected to generate MVR 2.3 billion in 2026, with the full impact of the increased fee rate to be realised next year.

Minister Zameer noted that total expenditure will rise by 11 per cent compared to this year’s budget, largely due to higher debt repayments and increased salary and allowance costs stemming from pay harmonisation.