Block grants to councils to be allocated based on island size

President Dr Mohamed Muizzu has announced that the fiscal formula determining block grants allocated to local councils will soon be based on island size rather than population under the Decentralization Act.

In a post on X, President Muizzu said the new approach would be reflected in next year’s budget. He said that while some islands have small populations, the scale of municipal services remains substantial because of their geographical size, leaving certain councils at a disadvantage under the current population-based formula.

The change comes alongside wider adjustments to council financing, including a decision to double Women’s Development Committees’ (WDCs) share of council budgets from five to ten percent, and to fund their Ramadan allowances through council budgets instead of their own.

Last year, the government allocated MVR 2.2 billion to councils in block grants, of which MVR 1.4 billion remained unspent.

During a recent visit to Baa Atoll, President Muizzu criticized the underutilization of funds, stating that grants were meant to be invested in local services provided on islands but much of the funds had been left unused.