The Ministry of Finance and Public Enterprises has projected a block grant allocation of MVR 2.5 billion for local councils in 2027 to support community development projects and municipal services.

The allocation is based on the requirement under the Decentralisation Act to provide 5 per cent of the state’s projected annual revenue as block grants to local councils.

Councils received MVR 2.15 billion in block grants last year and MVR 2.25 billion the year before. The funds are intended to support community projects, revenue-generating initiatives and the delivery of municipal services.

In a circular issued on July 23, the Finance Ministry instructed councils to submit their projected budgets for the 2027–2029 period by September 18.

City councils continue to receive the largest share of block grant funding, with Malé City Council receiving the highest allocation among local authorities.

The Government has also announced plans to reform the council funding model following the proposed abolition of atoll councils. Under the revised system, future allocations will consider factors including an island’s land area in addition to population size, with the aim of strengthening the financial capacity of councils and supporting local development.

The move comes after President Dr Mohamed Muizzu previously raised concerns over the use of council funds, urging that allocations be directed towards initiatives that provide greater benefits to local communities.