Gov’t Faces Backlash Over Reduced Budget Allocation for Local Councils

MV+ News Desk | November 2, 2024
Photo: People’s Majlis

The government is under fire for reducing the budget allocation for local island and city councils in its proposed 2025 budget, sparking widespread concern from council representatives and opposition parties.

The proposed budget, submitted to parliament on Thursday, allocates MVR 1.4 billion as a block grant for local councils, a significant decrease from the MVR 2.2 billion allocated in 2024. Mayors from cities including Kulhudhuffushi, Addu, Fuvahmulah, and Malé have voiced alarm over the cut, emphasising that the allocation falls short of the five per cent of projected revenue mandated by law.

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Amendments to the Decentralisation Act in 2019 stipulate that the government must allocate no less than five per cent of the projected revenue as a block grant to councils. With the 2025 budget projecting MVR 39.8 billion in revenue, the block grant set at MVR 1.4 billion represents only 3.7 per cent of this total.

Addu City Mayor Ali Nizar expressed his concerns over the impact of this reduction on basic council operations, stating that he is uncertain how salaries will be paid with the current allocation.

“It is concerning that the budget has been submitted with reduced allocations for councils, without any prior notice. I struggle to see how we can even meet salary expenses with this budget. This kind of fiscal policy appears both discriminatory and misleading, especially as the government has not disclosed recent fiscal developments or taken steps to cut costs,” he said in a post on X, formerly known as Twitter.

Kulhudhuffushi City Mayor Mohamed Athif similarly raised concerns, highlighting that the council’s allocation was MVR 30 million less than expected. “If the budget proposed by the government is passed as it is, we would find it difficult to manage recurrent costs. It is unacceptable to reduce the budget to the extent that councils cannot fulfil their roles in local development and welfare,” he wrote on Facebook.

Fuvahmulah City Mayor Ismail Rafeeq also took to X to share his views, noting that his council’s budget had been cut by 30 per cent.

Malé City Mayor Adam Azim described the government’s budget proposal as an indication of its intention to dismantle the Decentralisation Act, stating, “This is another ring in the chain of organised efforts to deprive the people of the services that councils are required to provide.”

The reduction in funding has prompted criticism from opposition parties, including the Maldivian Democratic Party (MDP) and The Democrats.

Former Foreign Minister and MDP leader Abdulla Shahid expressed opposition to the cut, arguing that, “The government does not have the legal authority to reduce the allocation for councils and divert funds elsewhere.”

In a statement, The Democrats argued that the Finance Minister had breached the Decentralisation Act with the reduced budget submission.

“The Decentralisation Act mandates that councils receive a minimum equivalent to five per cent of the state’s revenue. Submitting a budget with a significantly reduced block grant for councils constitutes a violation of this Act. The Democrats party is extremely concerned and condemns the finance minister for this breach of the law,” the statement read.

The party further emphasised that the responsibility to uphold decentralised governance is not optional for any government authority. “Neither the government nor parliament holds the authority to contravene a law that clearly stipulates the required funding for a given institution,” the statement concluded, calling on the government and finance minister to return to the confines of the law

The current administration has recently faced criticism from decentralisation advocates due to proposed amendments to the Decentralisation Act and a Urban Development bill.

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