The Maldives Monetary Authority (MMA) has advised the government to strengthen revenue administration and cut spending, noting that next year's budget deficit is projected to reach MVR 9.4 billion.
The advice was set out in a fiscal opinion the MMA submitted to the Parliament's Budget Review Committee. According to the opinion, the deficit in the MVR 59.7 billion budget proposed for 2027 amounts to 7 percent of gross domestic product (GDP).
As next year's budget does not include any new revenue-raising measures, the MMA called for existing policies to be implemented and for legal reforms to strengthen revenue administration to be expedited.
Among the spending measures it recommended are replacing universal subsidies with targeted subsidies for those who qualify, and reforms to rein in health sector spending. The MMA also advised speeding up renewable energy projects to reduce the country's reliance on oil.
On development projects, the MMA advised that work be prioritised according to the country's economic situation, with the most essential projects given precedence.
The MMA also stressed the importance of controlling foreign currency spending to keep official reserves at an adequate level, and of regularly depositing the foreign currency earmarked for the Sovereign Development Fund (SDF).
Recurrent expenditure makes up the bulk of the state budget. An estimated MVR 42.7 billion is projected to be spent on employee salaries and allowances, pensions, grants and subsidies.
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