President Dr. Mohamed Muizzu has declared a landmark reform to ensure a more equitable distribution of state funds for island councils, pledging that the revised fiscal formula will be presented with the 2026 national budget.
Under the current system, defined by Law No. 7/2010 (Article 79 of the Decentralization Act), government block grants are calculated mainly on population size. This approach has long disadvantaged islands with smaller populations, despite the fact that many of these islands, with large geographical areas, shoulder extensive municipal responsibilities.
Recognizing this imbalance, President Muizzu confirmed that the new formula will account not only for population but also for land size—ensuring that councils tasked with managing bigger islands are no longer left behind in terms of financial resources.
This adjustment reflects the government’s strong commitment to empowering local councils, strengthening decentralization, and providing fair opportunities for development across all islands, regardless of population size.
The reform marks another decisive step in President Muizzu’s broader vision to build a just, balanced, and self-reliant nation where no community is excluded from progress.
