The Government of the Maldives has allocated a block grant of USD117 million for local councils in the proposed State Budget 2023. The block grant of USD117 million for 2023 is a 3% increase compared to the block grant distributed in 2022.
The government is required to provide free aid, or block grants, as part of the amendments brought to the Decentralisation Act in 2019. The amendments dictate that 5% of the estimated yearly state income and 40% of the revenue received from land leases should be distributed to local councils.
Under the guidelines, the finance ministry is required to allocate block grants for the local councils based on the population of the island or atoll, the land area, the distance between the administrative island and the Greater Male’ Region, and the performance score given to the council by the Local Government Authority (LGA). Additionally, the guidelines state that local councils will receive the revenue from state services provided by the council administration, and councils are required to provide at least 5% of the block grant to the women’s development committee (WDC).
The guidelines also state that projects from the Public Sector Investment Programme (PSIP) that cost under USD324,000 are to be overseen by the administrative atoll or island council, while projects being conducted by state institutions that cost under USD971,000 are to be overseen by the city council.