Block grants to councils to consider island size from 2026

The government has decided to revise the formula used to allocate block grant aid to island councils, with future allocations to be based on island size.

President Mohamed Muizzu announced the decision in a post on X on Friday night. He noted that under the current fiscal formula for the government’s general grant to councils, allocations are determined mainly by population. As a result, sparsely populated but land-rich islands receive less, despite having the same level of municipal responsibilities.

The President stated that the fiscal formula is disadvantageous to councils in such islands and confirmed that the criteria would be reviewed to include island size. The revised allocation system will be reflected in the 2026 state budget.

According to the Decentralisation Act, revenue from the sale of property under the control of a council is considered council income. In addition, revenue generated by state facilities established on an island without council participation is to be distributed equally among the relevant atoll or city council sectors.

The law also requires the government to allocate funds in the state budget each year for the operation of island, city and provincial councils, the provision of services, and the implementation of council-led development projects. Current provisions further require population size and the number of islands in the administrative area to be considered in the allocation of funds.