The government has allocated a substantial USD 162.1 million in block grants to local councils across the nation for the upcoming fiscal year, Minister of Finance and Planning Moosa Zameer announced while presenting the proposed 2026 state budget to Parliament on Thursday.
This allocation, disbursed according to a fiscal formula enshrined in the Decentralisation Act, is set to increase further next year, promising enhanced financial autonomy for local governance bodies.
Minister Zameer emphasised that the block grants are intended to be strengthened to encourage spending that directly benefits the most vulnerable within communities.
"The 2026 budget has allocated USD 162.1 million for council block grants. The block grants are allocated to all councils through a fiscal formula as stipulated under the Decentralisation Act," he said , underscoring the legal framework underpinning the funding.
The Minister confirmed that the amount of block grants to local councils will see an uptick next year, primarily driven by significant impending changes to the nation's decentralisation system, notably the abolition of Atoll Councils.
With this structural reform, a larger percentage of block grants will be directly channeled to island and city councils, empowering them with greater resources.
Additionally, a key presidential decision will see the basis for budget allocation to councils shift from island population to the size of the land mass of islands, aiming to provide more equitable funding reflective of geographical scope and developmental needs.