Maldives had been undergoing a series of reform initiatives introduced by the Government since 2004. The Constitution was amended to establish a system of democratic governance. The revised Constitution, ratified in August 2008, included a chapter entitled “Decentralised Administration” stipulating that the administrative divisions of the Maldives have to be managed under a decentralised system. The Maldives has since embarked on an ambitious regionalisation and decentralisation programme in support of the Constitution’s requirements.
In order to create the legislative framework required for the decentralised administration, the Decentralisation Act was passed in April 2010, which defined a three-tier local government structure designed to have City Councils at city level, Atoll Councils at atoll level and Island Councils at island level. The first local council elections were held in February 2011, electing members to 188 island councils, 19 atoll councils and 2 city councils. Each of these tiers has decentralized functions under locally elected councils. An oversight body, referred as Local Government Authority has been created to monitor, regulate and build the capacity of local councils.
Article 82 of the Decentralisation Act 2010, stipulates that allocations shall be made at the national budget annually for city, atoll and island council based on the following; Administration, Provision of Services and Development expenditure. This allocation is to be made based on formulae to be derived on the criteria stipulated in Article 82 of the Decentralisation Act. Under the Strengthening Local Democracy and Governance Project, UNDP Maldives is working together with government partners to support the development and formulation of processes and systems to facilitate local governance, including capacity development at various levels.
The success of decentralization stipulated by the Constitution very much depends on devolved or mandated roles and responsibilities being matched by appropriate fiscal allocations within the national budgeting process. The efficiency and the effectiveness of the roles and responsibilities of all stakeholders in a decentralised system require that finance matches functions, the development of the fiscal formula would help to roll out the fiscal decentralization process and strengthen the overall local governance framework
In response to these needs, the project is seeking an international consultant to develop a fiscal formula that is consistent and compliant with the legal and institutional framework of the Maldives.