The Government has disbursed MVR 1.5 billion in block grants to local councils so far this year, an increase of MVR 200.5 million, or 16 per cent, compared with the same period in 2025, according to the Ministry of Finance and Enterprise.

The latest Weekly Fiscal Development Report said block grants recorded the largest increase in Government expenditure during the period. The funds are allocated to support decentralised public services and island development. Meanwhile, subsidy expenditure rose to MVR 3.1 billion, up 86.3 per cent from MVR 1.7 billion during the corresponding period last year.

Total Government expenditure reached MVR 24.5 billion, an increase of 21 per cent from MVR 20.3 billion a year earlier. Recurrent expenditure rose by 20.8 per cent to MVR 21.4 billion, driven mainly by higher subsidy spending and salary harmonisation, while capital expenditure increased by 22.1 per cent to MVR 3.2 billion.

The report shows the State recorded a budget deficit of MVR 1.5 billion, compared with a surplus of MVR 817.3 million during the same period last year. However, the primary balance, which excludes debt repayments and interest expenses, remained in surplus at MVR 1.2 billion.

On the revenue side, Tourism Goods and Services Tax (TGST) remained the largest contributor to State revenue, generating MVR 6.7 billion, an increase of 7.7 per cent from the previous year. Combined revenue from TGST and General GST rose to MVR 9.7 billion, while total tax revenue increased by 11.3 per cent to MVR 17.6 billion.

Overall, State revenue and grants reached MVR 23 billion, up 9 per cent compared with the same period last year. Grant assistance more than doubled to MVR 438.8 million, while non-tax revenue declined by 2.9 per cent to MVR 4.9 billion.