Land area is already a key parameter for calculating block grants

While President Dr. Mohamed Muizzu recently announced plans to introduce amendments in order to begin considering the land area of islands when calculating block grants to local councils, it has come to light that this has been a key parameter in the fiscal formula for block grants that has been in use since 2020.

In a post on X on Friday night, President Muizzu said that under the current fiscal formula, islands with small populations receive a lower block grant, even if the islands in question have a large land area, meaning more municipal works.

He said that his administration therefore plans on proposing a review of the formulae to add land area when submitting the 2026 state budget.

“Therefore, as the composition of the current fiscal formula for block grants is resulting in losses to these councils, we have decided to propose amending the fiscal formula to consider the land size of islands when we present the proposed budget for 2026,” he wrote.

ޤާނޫނު ނަންބަރު 7/2010 (ދިވެހިރާއްޖެހޭ އިދާރީ ދާއިރާތައް ލާމަރުކަޒީ އުޞޫލުން ހިންގުމުގެ ޤާނޫނުގެ 79 ވަނަ މާއްދާ)ގެ ދަށުން ކައުންސިލްތަކަށް ސަރުކާރުން ދޭ ޢާންމު ހިލޭ އެހީގެ ފައިސާ (ބްލޮކް ގްރާންޓް) ފޯރުކޮށްދިނުމަށްޓަކައި ކަނޑައަޅުއްވާފައިވާ ފިސްކަލް ފޯރމިއުލާ ގައިވާ ގޮތުން އާބާދީ…

— Dr Mohamed Muizzu (@MMuizzu) September 5, 2025

But according to former finance minister Ibrahim Ameer, land area is already part of the fiscal formula that the Finance Ministry has been using to calculate block grants since 2020.

In a post on X on Saturday morning, Ameer said that land area is in fact the second biggest factor considered in calculating the grant, after population size.

“You may be unaware, Honorable President @MMUizzu. But land area has been the second biggest factor in the fiscal formula for block grants, ever since block grants were introduced in 2020 to financially empower local councils,” said Ameer, who served as finance minister when the Maldivian Democratic Party (MDP) administration introduced block grants in 2020.

އިއްޒަތްތެރި ރައީސް @MMuizzu އަށް އެނގިވަޑައިނުގަންނަވަނީކަމަށް ވާނީ. 2020 ވަނަ އަހަރު ކައުންސިލްތައް މާލީގޮތުން ބާރުވެރިކުރުމަށް، ބްލޮކް ގްރާންޓްގެ އުސޫލުން ފައިސާ ދޭން ފެށީއްސުރެ، ބްލޮކް ގްރާންޓް ދިނުމަށް، ފިސްކަލް ފޯމިއުލާ ކަނޑައެޅުމުގައި ދެވަނައަށް އެންމެ ބޮޑަށް… pic.twitter.com/E0yx8fsS8l

— Ibrahim Ameer ???????? (@iameeru) September 6, 2025

The formula for block grants factor in the population size, the land area, distance to administrative capital of the atoll, distance to Male’ City, the performance of the council, the fiscal performance of the council, and revenue mobilization when calculating block grants to individual councils.

Finance Ministry records show land area carried 10 percent weight for calculating block grants to island councils between 2020 and 2022, and 7.5 percent since 2023. It has also carried 5 percent weight for calculating block grants to atoll councils, and 15 percent for city councils since 2020.