The Ministry of Finance and Planning has cautioned the Budget Review Committee of the People’s Majlis, that the government’s escalating salary expenditure risks pushing state finances into unsustainable territory.

Deputy Finance Minister Ahmed Saaid Mustafa informed the committee that fiscal space is steadily narrowing, noting that it is the natural outcome of how revenue and expenditure are currently structured. He pointed out that the opening of the new terminal at Velana International Airport (VIA) this year triggered an unprecedented wave of job approvals, adding further pressure to state finances.

As spending climbs, Saaid underscored the persistent lack of cooperation within government institutions in adopting performance-based budgeting. Although the Finance Ministry has attempted for years to establish this system, institutions continue to fall short even on basic technical participation, undermining efforts to control expenditure.

Saaid stressed that the continuous expansion of the state workforce is placing an increasing burden on public finances. He warned that if salary spending surpasses its allocated estimate, the overall expenditure level could move beyond what is financially sustainable.

For the upcoming year, revenue is projected at MVR 40 billion, while MVR 17 billion is expected to be consumed by salaries alone. In comparison, the final year of the previous administration recorded staff expenditure at MVR 12.8 billion.

Saaid also noted that the Finance Ministry covers salaries and operational costs for state-owned companies, further increasing total obligations.

The proposed budget allocates MVR 8.6 billion for salaries and wages, MVR 6.1 billion for allowances, and MVR 2.3 billion for pensions, amounting to a MVR 2.4 billion increase compared to last year’s allocation.