The Finance Ministry has presented a supplementary budget of MVR 5 billion to the Parliament after deciding that the MVR 49.8 billion budget approved for the current fiscal year will not be sufficient.

Explaining the reason for the supplementary budget, the Finance Ministry said that the current budget was approved by the previous government and there are many challenges in implementing the budget.

Among the issues raised was that no strategies were formulated although the budget had a slew of reforms to cut costs from July this year. Pointing out that the technical work in formulating the strategies was done by the present government, the Finance Ministry accused the previous government of not fulfilling its responsibility.

The highlights of the supplementary budget

• PSIP - MVR 2 billion
• Subsidies - MVR 1.02 billion
• Funds to state-owned enterprises - MVR 441.4 million
• Contingency Budget - MVR 650 million
• Student Loans - MVR 458.4 million
• Medical consumables - MVR 200 million
• Medical assistance - MVR 262.6 million
• Salaries and Wages - MVR 24.4 million

The Finance Ministry also said that the government was unable to implement projects that have been stalled because small amounts had been budgeted for PSIP projects. This was done after the projects were contracted at huge figures last year and advance payments were issued, it said.

There is also a need to supplement the budget to pay for last year's bills and to pay for the new mega projects as the pace of those projects has been faster than anticipated, the ministry added.

Other reasons for the supplementary budget

• President Dr. Mohamed Muizzu's vision and the government's views have not been fully incorporated into the budget
• Higher than expected cost of medical consumables
• Expected high spending on indirect subsidies
• Disburse loans to more students under the student loan scheme

Finance Minister Moosa Zameer told the Parliament that this year's budget was approved by the previous government knowing that MVR 60 billion would be needed for the budget. The supplement was reduced to MVR 5 billion with cost-control measures in place, he added.

Zameer claimed that the current government was seeking Parliament's approval for the expected expenditure in accordance with the Public Finance Act. He noted that the former Parliament Speaker had repeatedly flagged the former government's failure to seek Parliament approval before spending.

According to the figures shared by the Finance Ministry, 74 percent of the MVR 49.8 billion approved for the current fiscal year had been used by the end of last month. The budget is financed by raising MVR 1.4 billion from the external market and MVR 3 billion from the domestic market.

The supplementary budget also revised revenue estimates. An additional MVR 640 million is expected to be generated, taking the total revenue to MVR 34.1 billion. With the budget supplement, the total budget for 2024 is close to MVR 55 billion.