Government locks down local council powers in final year before 2026 elections

Transparency Maldives and other advocates of good governance have described the changes as a deliberate attempt to undermine decentralisation and tighten central government control over local affairs.

During President Dr. Mohamed Muizzu’s recent visit to Baa Atoll, Kihaadhoo Island Council President Hassan Shafiu publicly rebuked the government’s position while speaking at the podium in front of the president himself.

“Corruption within the central government has cost the state billions,” he said, while total funds lost to embezzlement by local councils “do not amount to even MVR 5 million (US$325,000)”. Funds lost to corruption from councils amount to 0.001 percent of the total, Shafiu claimed.

In a similar vein, Dhonfanu Island Council President Ahmed Irushad, also from Baa Atoll, addressed the crowd at the reception to welcome the president, urging Muizzu not to ratify the amendments to the Decentralisation Act.

“The decentralisation system is far more valuable than some council building,” he said, snubbing the government’s plans to build and upgrade council offices across the country.

Such direct criticism from island council leaders, especially in the presence of the president, is extremely rare in the Maldives. Typically, presidential visits are met with praise and ceremonial pleasantries. Public defiance signals growing discontent among local councils.

This week on the Ithuru Vaahaka podcast, I spoke with Hassan Shafiu from Kihaadhoo about his statements during the visit and his concerns regarding the amendments to the Decentralisation Act.

Under the new amendments, local councils must now seek explicit approval from the Ministry of Finance for nearly all major activities during the final year of their five-year term. The key restrictions include:

Furthermore, Local Authority Companies are now barred from engaging in any business activity already conducted by a private party within the same island, atoll, or city. The capital investment also must exceed MVR 10 million (US$650,000).

On the financial side, councils will only receive their allocated revenue after deductions for taxes, fees and debts owed to the central government or state-owned enterprises. Additionally, councils can no longer charge rent or fees for land or buildings leased for the purpose of providing essential public services.

On the surface, restricting council powers during an election year may appear a mechanism to prevent misuse of public resources. Outgoing councils could otherwise be tempted to hire supporters in last-minute staffing decisions to secure re-election, or launch dubious projects in hopes of political gain or personal benefit. However, the amendments have stirred intense backlash due to the government’s own questionable conduct. 

Councils’ reasons for challenging the move include:

The one-year freeze accounts for 20 percent of a council’s total term, severely limiting their capacity to function. Unsurprisingly, this has proven deeply unpopular with local leaders across the country.Hassan Shafiu expressed concern over the inability to function during the last year of the term as a decision that has the potential to cripple local island economies.

“All projects in the islands have been stopped, look at Kihaadhoo: the president is asking for more time and making new pledges, while none of the already promised have commenced,” he said, explaining that “the only projects run in these remote islands are those that have been commissioned by the council.”

Critics argue that the central government lacks the moral authority to impose these limits, due to its own conduct.

The administration has frequently been associated with vanity projects, such as the controversial Mathi Komandoo land reclamation, announced by then-President Ibrahim Mohamed Solih in February 2022, to boost MDP candidate Rashid’s election prospects after the death of MP Hussain Waheed.

Moreover, mass hiring in state-owned companies — often to roles without clear duties — has become routine in election years.

“Around 10 people were hired to various government institutions just a day before the president’s visit on Wednesday. It is a shame he feels limitations are needed for us, while openly abusing his own authority and power.”

None of this should come as news to the Maldivian public. The government hired 1,501 new staff before the 2023 presidential election and 1,468 staff before the 2024 parliamentary elections, despite initiating no new projects. These hires were "solely to create new employment opportunities" rather than for operational needs, an audit concluded in May.

Furthermore, it is widely believed that the Ministry of Finance will withhold approvals for projects or staffing requests from opposition-led councils, regardless of merit, while councils dominated by the ruling People’s National Congress (PNC) will face no such obstacles. Councillors across the country are asking: why must elected local officials justify their decisions to unelected political appointees like the finance minister?

The financial conditions under the new law are widely seen as impractical for island communities. The MVR 10 million capital requirement effectively disqualifies most councils from engaging in business through Local Authority Companies.

While this may unintentionally encourage regional collaboration, most individual islands do not have access to such financial resources.

Hassan Shafiu commented: “Only one council in Baa Atoll receives MVR 10 million as a block grant. Not even the Atoll Council gets that much. How on earth would an island council accumulate MVR 10 million in capital? This effectively bans councils from earning through Local Authority Companies.”

In cities like Malé, utility providers contracted to deliver electricity, water, and sewerage services generate millions in profits. While STO provides staples at controlled prices, it too operates at a profit.

If these companies are profit-making, should they still be granted free land? Should they not pay rent, especially when they refuse to lower tariffs? 

Meanwhile, the government has failed to meet its legal obligation to allocate 5 percent of the national budget to local councils.

For example, in 2024, Malé City Council received MVR 180 million (US$11.6 million) out of a total state budget of MVR 49.9 billion (US$3.2 billion). In 2025, with the national budget increased to MVR 59 billion (US$3.8 billion), the council received only MVR 121 million (US$7.8 million) — MVR 59 million less than the year before.

Despite this shortfall, the government insists on tightening restrictions.

It is also worth noting that councils process all revenue and expenses in the Viya module administered by the LGA. The LGA is the parent body of local councils whose board is controlled by the government. The CEO is directly appointed by the president. 

Moreover, local councils conduct mandatory quarterly public consultations. In contrast, the central government spends freely, with little accountability.

The MDP currently holds the majority of local council seats nationwide. For a government with opposing political interests, allowing these councils operational freedom in an election year presents a clear political risk.

Hence, the amendments appear to be driven more by political strategy than genuine administrative reform.

By locking down the councils in their final year, the government is effectively neutralising opposition-led councils, undermining the very spirit of decentralisation.

Hassan Shafiu has called on all councils across the Maldives to stand united against the government’s attempt to curtail their powers.

“Just as the president warned India that large countries cannot be allowed to bully smaller nations, do not assume the central government can bully islands and local councils,” he said.

Saif Fathih is a columnist at the Maldives Independent and a serving member of the Malé City Council for Galolhu North. With his educational background in communications, international studies and public policy, he previously worked as a journalist, editor and public policy advisor, with roles including senior policy director at the ministry of national planning and editor of Ocean Weekly Magazine. Saif began his career as a radio producer and presenter at Minivan Radio, writer for Minivan Daily, and translator for the British High Commission and the European Union Mission to Sri Lanka and the Maldives. He is also the host of Ithuru Vaahaka, the Maldives Independent podcast.