The Government has allocated USD 162.1 million in block grants for councils in 2027, while the Ministry of Finance and Public Enterprises has instructed all councils to submit their budget projections for 2027 to 2029 by 18 September 2026.
The ministry said the State budget must be prepared and submitted to Parliament at least two months before the beginning of the financial year. In line with the Principles for Determining Grants to Councils, Preparing Council Budgets and Implementing Council Budgets, councils are required to prepare and submit their proposed budgets to the ministry.
Councils have been asked to submit projected budgets covering 2027 through 2029 in accordance with the circular. The ministry said budgets for Government block grants must not exceed its projected allocations for the three years. However, councils are required to finalise their budgets only after Parliament approves the State budget for the coming year, taking into account the final allocations approved in that budget.
The ministry said council budgets must clearly distinguish between revenue and expenditure. Budget estimates should include Government block grants, conditional grants provided through Government institutions, councils' trust funds and other revenue generated by councils.
The ministry confirmed that USD 162.1 million has been earmarked for councils' block grants in 2027.
According to the ministry, 2026 is the year in which the largest block grant allocation for councils has been included in the State budget. This year's budget allocated USD 160.2 million for council grants.
In comparison, USD 136.2 million was budgeted for councils in 2023, although actual expenditure exceeded the allocation by USD 518,807. In the following year, councils received USD 142.7 million in block grants.
So far this year, USD 81.1 million has been disbursed to councils under the block grant scheme.
City councils receive the largest share of council funding, with Malé City Council receiving the highest allocation.
Since 2020, block grants have been distributed under a fiscal formula based on Government revenue.
The Government has also decided to introduce major changes to the council grant system. Following the abolition of atoll councils, it had previously announced that the proportion of grants allocated to island and city councils would increase.
The Government has also decided to revise the allocation formula so that future budget allocations for councils will take into account the land area of islands instead of relying solely on population. According to the Government, the changes are intended to strengthen councils' financial capacity and improve the implementation of development projects.