The Government has disbursed MVR 1.25 billion in block grants to local councils so far this year, marking a 16.8 per cent increase compared with the same period in 2025, according to the Ministry of Finance and Public Enterprises.

The latest Weekly Fiscal Development Report shows MVR 1.07 billion had been allocated to local councils during the corresponding period last year. This year's State budget includes MVR 2.47 billion for block grants to local councils, the highest allocation on record, compared with an initial allocation of MVR 2.1 billion in 2023, which later increased to MVR 2.2 billion.

City councils continue to receive the largest share of block grant funding, with Malé City Council allocated the highest amount among all local authorities. Block grants have been distributed based on State revenue since 2020.

The Government has also announced plans to reform the local council funding model by increasing the share of grants allocated to island and city councils following the planned abolition of atoll councils. The revised system will also consider an island's land area, in addition to population, when determining future grant allocations, with the aim of strengthening councils' financial capacity and supporting local development projects.