The Local Government Authority (LGA) has issued a directive to all Maldivian councils, instructing them to implement the recently ratified amendment to the Decentralization Act.
President Dr. Mohamed Muizzu ratified the bill on Thursday, officially enacting it into law.
The President's Office announced the ratification on Thursday evening, following earlier concerns raised by various entities, including several councils, regarding the proposed changes.
In a letter dispatched to all local councils on Monday, signed by LGA CEO Mohamed Nimal, councils were explicitly instructed to enforce the act. The letter also stated that the LGA is currently collaborating with the Ministry of Finance to develop regulations related to the new legislation.
Key Changes Introduced by the Amendment:
Local Authority Company Operations: These companies are now prohibited from engaging in economic activities already undertaken by private enterprises within their operational islands. Their work must primarily focus on essential rural infrastructure development, and projects will require an investment exceeding MVR 10 million. Conflicting businesses are mandated to cease operations within 90 days of the amendment's enactment.
Rent from Public Service Allocations: Councils are now barred from charging rent for land or buildings allocated to parties providing basic public services.
Revenue Allocation: Councils will receive revenue only after the deduction of any state taxes and if they have not defaulted on payments for public services for over six months.
Bank Account Maintenance: Councils are now required to maintain bank accounts in accordance with Ministry of Finance procedures and to provide statements upon request.
Restrictions in Final Year: If a council's term is 365 days or less from expiration, certain actions will be restricted without adherence to norms set by the Ministry of Finance and the Local Government Authority (LGA). These restrictions include:
Recruitment of contractual or long-term employees for council offices.
Lease and grant of land, lagoons, and reef areas under council jurisdiction.
Initiation of new development projects not specified in council development plans.
Many councils, alongside the opposition Maldivian Democratic Party (MDP), have voiced their apprehension regarding the amendment. The MDP has characterized the changes as an attempt to diminish the authority of councils and render them subordinate to the central government.