Record US$2.4bn budget proposed for 2020

Finance Minister Ibrahim Ameer presented to parliament on Monday a record MVR37.5 billion (US$2.4 billion) budget for 2020, outlining ambitious plans to begin work next year on delivering key manifesto pledges.

Total expenditure of MVR35.6 billion, of which 59.4 percent is recurrent expenditure and 40.6 percent is capital investment

MVR1.9 billion for debt repayment 

Revenue and grants projected at MVR29.9 billion, of which MVR17.8 billion is expected from taxes, MVR6.8 billion from non-tax revenue and MVR5.2 billion as grant aid

MVR2.5 billion from new revenue raising measures such as income tax, leasing islands for resort development, changing foreign labour quota fees and work permit fees, and basing the airport service charge on ticket classes

Budget deficit of MVR5.7 billion or 5.8 percent of GDP to be plugged through foreign loans, sale of treasury bills in domestic market and US$300 bond in international financial market

An “appropriations structure” proposed for parliamentary approval for the first time

Record Public Sector Investment Programme of MVR10.2 billion for water, sewerage, harbours, roads and other infrastructure

MVR4.1 billion allocated for developing tertiary hospitals in five regions, upgrading health facilities, establishing national ambulatory service and digitising national health network

MVR4.4 billion for education to fund school breakfast programme, develop three new technical and vocational training institutes and carry out projects in 101 islands towards single-session schools

MVR750 million for scholarships, free first degrees and higher education loan scheme

MVR4 billion for social security programmes and MVR951 million for the Aasandha health insurance scheme 

Homes for the elderly in Hulhumalé and Laamu Gan and children’s home in Addu City

MVR973 million for building 20,000 social housing units with construction to begin for 10,000 units in 2020

MVR247 million to develop main commercial seaport on reclaimed Gulhifalhu lagoon with capacity to serve large vessels on international shipping routes along with fivefold decrease in loading and unloading time

MVR411 million for new bridge to connect Malé to the capital’s suburb Vilimalé as well as Gulhifalhu and the industrial island of Thilafushi

MVR853 million for new passenger terminal at Velana International Airport

Record MVR1.6 billion as block grant for local councils 

MVR50.6 million to upgrade fish canneries

MVR154 million for tourism promotion and advertising with exposure for guesthouse or mid-market sector

MVR400 million as capital for the SME Development Finance Corporation to issue small business loans

MVR150 million for nationwide public transport network with high-speed ferries, new terminals and upgraded harbours

MVR275.8 million for renewable energy projects

MVR212 million for 12 waste management projects 

Funds allocated for establishing Public Defenders Office, Juvenile Detention Centre and De-radicalisation and Rehabilitation Centre on Himmafushi island

Revised estimates for 2019

MVR24.1 billion as revenue and MVR29.1 billion as expenditure with MVR5 billion or 5.7 percent of GDP as fiscal deficit

Public debt to stand at MVR52.5 billion or 59 percent of GDP at the end of year but estimated to decline to 58.4 percent in 2020

Revised estimate for economic growth is 5.7 percent

Projected growth for 2020 is 7.5 percent driven by tourism and infrastructure scale-up

Inflation rate was 0.1 percent on average in 2019 but is projected to grow to one percent in 2020

Foreign currency reserve is estimated to stand at US$636 million by the end of 2019 but is projected to increase to US$818.8 million next year

The government’s aim is to increase the reserve to US$1 billion by 2023

GDP growth