The government has initiated a sweeping shift in fiscal policy, sharply reducing public expenditure while recording a modest increase in revenue during the first eight months of the year. Newly published figures from the Ministry of Finance and Planning point to a recalibration of national priorities, with capital investment absorbing the most significant cuts.
Government spending totalled USD 1.60 billion as of 28 August, a 15.6 percent decline from the USD 1.91 billion recorded during the same period last year. The contraction was led by a 57.4 percent drop in capital expenditure, funds typically directed toward infrastructure development, including roads, bridges and airports. Recurrent spending, which covers the operational costs of government offices, also declined by 1.7 percent.
Revenue figures moved in the opposite direction. Government income and grants rose by 4.9 percent, reaching USD 1.64 billion, compared with USD 1.56 billion in the previous year. Tax receipts formed the bulk of this total, contributing USD 1.28 billion, while non-tax revenue accounted for USD 350.45 million.
The breakdown of capital expenditure reveals a continued, though reduced, commitment to infrastructure. By the end of August, USD 200.91 million had been spent in this category. Within that amount, USD 350.45 million was allocated for infrastructure assets, underscoring the government’s focus on essential public works.
A shift in strategic emphasis is evident in the Public Sector Investment Programme (PSIP). Last year, land reclamation and road construction dominated PSIP allocations. This year, the majority of funds have been redirected toward maritime infrastructure, with projects aimed at resolving harbour and docking challenges receiving priority.
Spending under the PSIP has reached USD 259.66 million so far, well below the USD 804.67 million projected for the programme in the 2025 state budget.
Efforts to contain recurrent costs have also gained traction. Administrative expenses, which comprise 56 percent of recurrent spending, fell by 5.5 percent compared with the same period last year. Targeted reductions contributed to this outcome, including a 14.1 percent cut in office supply expenditures and a 16.6 percent decrease in repair and maintenance costs.