Finance Ministry reports higher tax collection, yet spending pressures push deficit to MVR 4.5 billion

Tax revenue as of Thursday last week increased by seven percent compared to the same period last year, while government expenditure also rose, according to the latest Weekly Fiscal Developments Report released by the Ministry of Finance.

According to the ministry, tax revenue stood at MVR 24.63 billion so far this year, compared to MVR 23.03 billion in the same period last year. The growth in tax revenue was mainly driven by higher revenue from withholding tax on non-residents, along with increases in several other tax categories, the ministry said.

Withholding tax revenue rose 10.4 percent to MVR 1.39 billion. Import duties increased 15.2 percent to MVR 2.79 billion, while corporate income tax rose 9.2 percent to MVR 3.01 billion. Airport service charge and departure tax collections increased 8.8 percent to MVR 1.55 billion, and green tax revenue rose 68.1 percent to MVR 0.52 billion. Total revenue and grants increased 2.6 percent to MVR 31.89 billion.

Despite the increase in revenue, government expenditure has also risen. As of October 15, total expenditure stood at MVR 36.39 billion, up 16.9 percent from the previous year. Of this, recurrent expenditure reached MVR 31.35 billion, while spending on subsidies increased 73.3 percent to MVR 4.31 billion, and expenditure on Aasandha rose 16.9 percent to MVR 1.92 billion. A total of MVR 5.56 billion was spent on salaries and allowances.

Capital expenditure increased 15.2 percent to MVR 5.04 billion, including MVR 1.57 billion spent on land and buildings. The overall budget deficit has now reached MVR 4.50 billion, as expenditure continues to outpace revenue.