LGA Rejects Overspending Claims, Clarifies Extra MVR 61.2M Funding for Atoll Offices
The LGA confirmed that it was originally allocated MVR 37.3 million for its standard annual operations in 2026. | Photo: LGA
The Local Government Authority (LGA) has firmly rejected recent press reports alleging that the agency breached its allocated 2026 state budget, attributing the apparent financial discrepancy to a MVR 61.2 million transitional funding package arranged directly with the Ministry of Finance to operate newly established administrative offices.
In a formal statement released today, the authority addressed growing media scrutiny following the publication of public expenditure statistics by the Ministry of Finance and Public Enterprises. The LGA expressed disappointment over the coverage, stating that news outlets circulated claims of overspending while refusing to cooperate with the authority’s repeated attempts to provide clarifying information.
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The authority noted that the dispute lay in a major administrative overhaul of the Maldives’ local governance system. Under the 17th Amendment to the Decentralisation of the Administrative Areas of the Maldives to Local Councils Act, the state formally dissolved existing atoll council establishments and replaced them with newly structured atoll offices, effective 17 May 2026.
With this legislative restructuring, the LGA assumed full responsibility for financing employee salaries, allowances, and essential operational expenses across all newly created atoll offices.
However, the People’s Majlis (Parliament) had drafted and enacted the 2026 national budget prior to the passage of the 17th Amendment. Consequently, the original fiscal allocation accounted only for the previous local council framework, leaving the LGA’s newly expanded responsibilities unbudgeted in the annual parliament-approved sum.
The LGA confirmed that it was originally allocated MVR 37.3 million for its standard annual operations in 2026. Official figures show that between January and October 2026, the LGA spent MVR 18.5 million to run its central administration, deliver core services, and meet payroll obligations for its existing workforce—placing its baseline expenditure well within the allocated limit.
To prevent service disruptions in the administrative divisions and guarantee that newly transferred municipal staff received their full salaries and allowances without interruption, the LGA negotiated an interim financial mechanism with the Ministry of Finance and Public Enterprises.
According to the authority, under this arrangement, the ministry agreed to cover all operational and administrative costs arising from the creation of the atoll offices. Between 17 May and October 2026, the LGA disbursed MVR 61.2 million in direct financial assistance supplied by the ministry for this purpose.
Addressing why public fiscal disclosures showed expenditures exceeding the baseline budget, the LGA explained that the Ministry of Finance’s published statistics combined the original departmental budget with the secondary, approved financial aid disbursed for the regional offices.
The authority emphasized that all disbursements strictly complied with the Public Finance Act, subsidiary regulations, circulars, and established government frameworks, adding that every transaction occurred with the explicit approval of the Ministry of Finance and Public Enterprises.
