Gov’t Tables Bill to Limit Financial Powers of Local Councils

The government has submitted a bill to parliament proposing amendments to the Decentralisation Act aimed at restricting the financial and business activities of local councils, particularly during the final year of their term.

The bill, introduced in today’s parliamentary sitting by Ibrahim Hussain, MP for South Fuvahmulah, seeks to set clear boundaries on the types of economic activities local authority companies may undertake, and to establish tighter government oversight on councils’ financial decisions.

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According to the proposed amendments, councils whose remaining term is one year or less would be prohibited from making significant financial decisions—including hiring permanent or contract staff and leasing or granting land, lagoons and islands—unless they comply with standards set by the Ministry of Finance and the Local Government Authority. These measures, the bill states, aim to ensure accountability and prevent last-minute decisions that could bind future councils.

The bill also limits the business activities of local authority companies to economic projects not already carried out by private entities within their jurisdiction. In addition, the projects must be essential for infrastructure development and must involve an investment or raw material cost exceeding MVR 10 million. Companies currently engaged in activities that do not meet these criteria would be required to wind down those operations within 90 days of the bill’s enactment.

Further provisions would bar councils from collecting rent on land or buildings leased for the purpose of providing basic public services. Councils would also need to manage their bank accounts in line with regulations set by the Finance Ministry, and provide statements when requested.

The bill has sparked criticism from the opposition Maldivian Democratic Party (MDP) and other proponents of decentralisation. Former President Ibrahim Mohamed Solih, posting on social media platform X, warned that rolling back decentralisation reforms would ultimately harm island residents. “At a time when the positive changes from the 2019 reforms are starting to be visible, it is the residents of the islands who will face the heart-wrenching effects of manipulating the system for political gain,” Solih wrote. He called for the government to reconsider and withdraw the proposed amendments.

ފެހި ޤާނޫނު އަސާސީއިން ރައްޔިތުންގެ ތަރައްޤީއަށް މަގުފަހިވި ނިޒާމީ އެންމެ މުހިއްމު އެއްބަދަލަކީ ލާމަރުކަޒީ ނިޒާމު ޤާއިމުވުން. އެކި ވެރިކަމުގައި އެ ބާރުތަކާއި ވަޞީލަތްތައް ހަނިކޮށް، ފުޅާކުރަމުން އައިސް 2019 ވަނައަހަރު ލާމަރުކަޒީ ޤާނޫނަށް ހުށަހެޅި އިސްލާޙްތަކަކީ ފުޅާ…— Ibrahim Mohamed Solih (@ibusolih) August 3, 2025

In a statement, the MDP argued that the bill seeks to “limit the authority of the councils and eliminate the current decentralisation system,” urging parliament to reject it.

ނޫސްބަޔާން: ކައުންސިލްތަކުގެ ބާރު ކަނޑުވާލުމަށް ލާމަރުކަޒީ ގާނޫނަށް ގެންނަ ބަދަލުތައް ބަލައިނުގަނެ އެ ބަދަލުތަކާ ދެކޮޅަށް ތެދުވުމަށް ކައުންސިލަރުންނަށް ގޮވާލުން pic.twitter.com/CNYZaP6UNe— MDP Secretariat (@MDPSecretariat) August 3, 2025