Parliament committee debates use of surplus in council funds

Members of the Parliament’s Finance Committee have raised concerns over a reported MVR 2.1 billion surplus in revenue and grants allocated to local councils, noting that the existing legal framework limits the use of these unspent funds.

During a committee meeting held Monday, members reviewed the current status of council grants and revenue. The discussion focused on the implications of the financial surplus and the need for potential legal reforms to enable better utilisation of the funds.

Deputy Speaker of Parliament and Dhiggaru MP Ahmed Nazim noted that the Ministry of Finance is expected to add approximately MVR 200 million each year to the amount of unused revenue and grants accumulated by local councils.

Nazim said that under the current Decentralisation Act, there is no legal provision allowing the funds to be reallocated or spent once the financial year ends. He described this as a shortcoming of the existing legislation.

“Because with such a large amount of money that no one can touch, nothing useful can be done with it,” Nazim said. “This should be taken into consideration when amending the Decentralisation Act.”

Baarah MP Ibrahim Shujau echoed similar concerns, stating that while the funds are intended for development projects that benefit the public, the absence of clear legal guidance on how unspent funds should be handled has limited councils’ ability to use them effectively.

He proposed that the Finance Committee formally request the Decentralisation Committee to include a legal requirement for financial reconciliation and reporting of council accounts when revising the Decentralisation Act.

“I believe the finance committee should strictly ask the Local Government Authority (LGA) to ensure that councils maintain their bank accounts, reconcile funds, and manage them within a transparent system,” Shujau said.

Opposition members also weighed in, noting that the issue should be viewed in the context of disparities in council revenue. They pointed out that not all councils receive the same income or block grants, and that financial needs vary by region.

One member stated, “It is not appropriate to keep such a large amount of money unused, especially when other financial pressures are ongoing. However, not all councils are equally resourced, and this must be considered when proposing changes.”

Hulhumalé South MP Ahmed Shamheed expressed concern that the discussion might be misused to discredit councils. He noted that councils also generate revenue independently and said that unspent balances do not necessarily reflect mismanagement.

“This is actually a story aimed at tarnishing the councils again in today’s government’s efforts against them,” Shamheed said.