President ratifies bill restricting council financial powers in final year
President Muizzu said he supports the decentralisation system but believes reforms are needed to strengthen it.
President Mohamed Muizzu has ratified amendments to the Decentralisation Act that limit certain financial powers of local councils.
The President’s Office announced the ratification on Thursday.
The bill was introduced in Parliament on August 4 by PNC MP for Fuvahmulah South, Ibrahim Hussain, on behalf of the government. It was debated the same day and referred to the Local Government Committee, which held two meetings before deciding to pass the bill without major changes. The PNC-led Parliament approved the bill on August 6.
Under the amendment, if a council has less than one year remaining in its term, three financial actions require prior government approval:
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Recruitment of permanent or contract employees for the council office
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Leasing or granting of land, forests, or forest areas under the council’s jurisdiction
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Initiation of new development projects not listed in the council’s development plans
The current councils’ term ends in May 2026, leaving about 10 months in office. These provisions will therefore apply to their remaining term.
The amendment also narrows the scope of council-run businesses. To operate, a business must:
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Not compete with existing private economic activities in the island or islands under the council’s authority
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Be essential for the structural development of the area
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Have an investment or capital cost exceeding MVR 10 million
Any council business not meeting these criteria must cease operations within three months.
Additional provisions:
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Council bank accounts must follow Ministry of Finance regulations, and account statements must be provided upon request.
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Funds from the State will be released after deducting any unpaid taxes or utility bills; arrears older than six months will also be deducted.
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Councils cannot charge rent for land or buildings allocated to provide basic services, such as electricity supplied by STELCO or Fenaka.
President Muizzu said he supports the decentralisation system but believes reforms are needed to strengthen it.
