A state budget of MVR 37.5bn, presented to People's Majlis

Finance Minister Ibrahim Ameer has presented the proposal for the state budget 2020, to the People’s Majlis sitting on Monday.

The State Budget 2020 is set at MVR 37.5 billion and has the biggest Public Sector Investment Programme (PSIP) seen in the country’s history.

As such, the state budget for the upcoming year includes a PSIP of MVR 10.1 million, which is MVR five million more than the past year.

It also estimates to receive income and free aid of MVR 29.9 million out of which MVR 17.8 million is estimated as tax, MVR 6.8 million not in tax and MVR 5.2 million as free aid and other means.

Expenditure for 2020 is set at MVR 35.6 million out of which MVR 7.9 million is for economic progress.

A recurrent expenditure of MVR 22.2 million, and MVR 6.6 million for capital expenditure has also been set under the proposal.

Some of the projects marked under the scope of 2020’s state budget include MVR 853 million for the Velana International Airport development project, MVR 955 million for land reclamation across several atolls, MVR 411 million for the Greater Malé Region Connectivity Project, MVR 247 million each for Gulhifalhu reclamation and port development as well as preparing the outer island for sustainable energy development project, among several others.

The budget further sets MVR 4.1 million for the health sector, MVR 4.4 million for the education sector, MVR 3.9 million for social protection as well as MVR 4.4 million for enacting justice and security measures.

Further, a budget of MVR 3,353 million has been set for projects across the Greater Malé Region with a MVR 523 million budget for southernmost Addu City.

The government further envisions to complete water and sewerage projects across 157 islands within 2020-2021 under the PSIP budget.

In addition, MVR three billion is expected to be received as disbursement from foreign countries, with a bond issuance of USD 300 million by the government. The government is also set to sell T-bills and T-bonds reaching MVR 564 million within the upcoming year.

While the Public Finance Act states that the proposed budget for the upcoming year must be submitted two months prior to the beginning of the new year, the budget for 2020 was initially forwarded to the parliament on 31 October.

According to the ‘2020-2022 Medium Term Fiscal Strategy’ report compiled by the finance ministry in June, a budget deficit is expected to be maintained at 6.5 percent of GDP, however, the proposal states that it is estimated to be set at 5.8 percent of GDP.

The overall state debt at the end of 2019 is estimated to be MVR 52.5 million which is 59.8 percent GDP. However, debt for this year is expected to plummet to 58.4 percent in productivity.

The People's Majlis passed an MVR 30.2 billion state budget for 2019, it was increased to MVR 32 billion in August this year following a request from the finance ministry.