The decision to increase the block grant follows concerns raised by councils.
Ministry of Finance has advised Parliament to increase the block grants allocated to local councils in next year's budget.
In a letter to Parliament, the ministry said that MVR 700 million had been allocated for block grants to councils from the contingency budget. The budget, which was submitted to Parliament last week, initially included MVR 1.4 billion for local councils. With the later addition of MVR 700 million, the total now stands at MVR 2.1 billion.
While MVR 2.2 billion was allocated for block grants to councils this year, a similar amount is proposed for the upcoming year.
The decision to increase the block grant follows concerns raised by councils.
Last week, President Dr Mohamed Muizzu announced that five percent of the block grant for councils would be included in next year’s budget. He also indicated plans to amend the law to allocate a certain percentage of local tourism revenue to councils.
In addition, President Muizzu said that in the coming weeks, he would reveal several important changes outlined in the law that have not yet been implemented for councils.
The budget contingency for next year was initially set at MVR 950 million. However, following the allocation of MVR 700 million for block grants for councils, the contingency budget has been reduced to MVR 250 million. A contingency budget is a reserve fund set aside for special circumstances, such as emergencies or disasters.
The letter also outlined the calculation for the block grants in the budget, the individual grants to be received by each council, and the expected budget estimates.
The largest share of block grants is allocated to city councils, with the amount determined in relation to state revenue.
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