Major reforms that limit councils' financial expenditure

The government has proposed major amendments to the Decentralization Act aimed at placing tighter controls on how local councils manage their finances.

The first reading of the bill, submitted by Fuvahmulah South MP Ibrahim Hussain, is scheduled in Parliament tomorrow.

The proposed changes are intended to address concerns raised by government officials, who claim that some councils are misusing financial powers granted under the current law.

One of the major changes would restrict what councils can do during their final year in office. If a council has less than one year left in its term, it would need to follow special rules set by the Ministry of Finance and the Local Government Authority (LGA) before making certain decisions. These include:

1. Hiring new permanent or contract employees

2. Leasing or granting land, lagoons, or reefs under the council's control

These actions would still be allowed, but only if they follow government-approved procedures.

Another significant part of the bill deals with local authority companies. While these companies will still be allowed to conduct economic activities, three new conditions would apply:

- The activity must not compete with private businesses on the island

- It must not be essential for the island’s infrastructure or development

- The investment or capital involved must not exceed MVR 10 million

Additional changes include:

- Councils’ bank accounts will have to be managed under guidelines set by the Finance Ministry.

- If Finance Ministry requests a council's bank statements, the council has to provide the information.

- The government will not be allowed to charge rent for land, lagoon, or reefs leased to provide basic public services.

Opposition Maldivian Democratic Party (MDP) has criticized the bill, claiming it will weaken the entire decentralization system. The party has called on the government to withdraw the proposed changes.