The MVR 9 billion arrears claim doesn't add up

According to the 2023 audited consolidated financial statements, the government’s year-end payables were MVR 3.12 billion, not MVR 9 billion. This figure comes directly from the Government’s SAP accounting system and is verified by the Auditor General's Office under internationally recognised public-sector auditing procedures. Unless an independently validated arrears schedule is publicly released, MVR 3.12 billion remains the only legally reliable figure for 2023.

The World Bank had already warned that the Maldives would face cash-flow problems in 2024. Its Maldives Development Update (October 2024) reported that “unavailability of finance” caused delays in contractor payments and “an accumulation of expenditure arrears.” In short, arrears increased during 2024, not entirely inherited from 2023.

The Auditor General’s Budget Position Audit 2024 provides the clearest evidence. It shows that year-end payables rose from MVR 3,195 million in 2023 to MVR 6,000 million in 2024, an increase of nearly MVR 2.8 billion, or an 88 percent jump within a single year. The Auditor General stated plainly that “there was a notable rise in accounts payable during the year,” demonstrating that the surge occurred under the current administration because of 2024 liquidity pressures, not because 2023 ended with MVR 9 billion in arrears.

Additional findings point to weaknesses in the public sector investment programme's implementation as a major cause of these 2024 arrears. The Auditor General’s Review of Budget Position Report 2024 shows that 100 PSIP projects were started without budget allocation, 480 projects overspent their approved limits, and 1,311 projects recorded zero progress, while PSIP spending exceeded the budget by more than MVR 3 billion. When large-scale projects are launched or expanded without available cash, payments freeze, contractors wait, and arrears inevitably build up, which is exactly what the AG concluded happened in 2024. 

The legal framework further clarifies the boundaries of public spending. Under the Public Finance Act (Law 3/2006, Article 2(a)), the government may only enter commitments when funds are legally available or when authorised under the Public Finance Regulation. The constitution (Article 96(c)) requires all expenditure to be within the amounts approved by parliament. The public finance regulation (4.01 and 4.03) adds that no commitment can be made without budget authority. These laws prevent ministries from creating unfunded liabilities that later appear as “arrears.”

The Act also explains how unpaid bills must be handled at year-end. Article 8 requires all bills to be submitted within 30 working days after year-end to be charged to the previous year’s budget or the Advance Fund (Article 23(a)). Late submissions become current-year obligations and, if overdue, arrears. PFR 4.04 requires a certified list of all unpaid invoices to ensure accuracy and prevent inflated arrears estimates.

Even under IPSAS Cash Basis, governments must disclose all payables and outstanding obligations in the notes to their financial statements (IPSAS Cash Basis, Part 2). This is why Note 60 of the 2023 accounts clearly lists payables of MVR 3.12 billion. Any number significantly higher than this must be backed by verified creditor lists and documented due dates.

The IMF defines arrears as payments past their contractual due dates and stresses the need for proper recording, public reporting, and structured arrears-clearance plans.

Taken together, all authoritative evidence, the audited financial statements, the 2024 auditor general reviews, World Bank reports, and the legal framework, show that the Maldives did not end 2023 with MVR 9 billion in arrears. The verified figure was MVR 3.12 billion, and the subsequent increase to MVR 6 billion occurred during 2024.

Fiscal transparency requires that public communication reflects audited facts, not political interpretation. The claim of “MVR 9 billion in 2023 arrears” is not supported by any official record.