LGA: Apparent overspending in budget attributed to atoll branch operation costs

The Local Government Authority (LGA) states that the apparent overspending in its budget for the current year is attributable to the inclusion of expenses incurred by its atoll branches in the authority’s overall expenditure.

In a press statement on Thursday, the LGA noted that following the 17th amendment to the Decentralization Act, the former Atoll Council secretariats were dissolved and re-established as LGA branches effective May 17, 2024.

The authority explained that as a result of the restructuring, it assumed responsibility for all administrative expenses associated with the branches, including the payment of employee salaries and allowances and the settlement of outstanding payments owed to various parties.

The state budget initially allocated MVR 37.3 million to the LGA for the current year. As of October 6th, MVR 18.5 million had been spent on the authority’s operations, services, and employee remuneration.

The LGA noted that the original budget was prepared based on the authority’s organizational structure prior to the incorporation of the atoll branches. As a result, expenditure related to the branches was not factored into the budget approved by Parliament.

To maintain uninterrupted services and ensure the timely payment of employee salaries, the LGA sought and received additional funding from the Finance Ministry. Between May 17^th and October 6^th, a total of MVR 61.2 million from the additional funds was spent on the administration and operation of the atoll branches.

The LGA said that although Ministry of Finance statistics show expenditure exceeding the authority’s initial budget allocation, this is solely due to the operational expenses of the atoll branches now being recorded under the LGA. The authority stressed that all expenditures were made in accordance with the Public Finance Act and relevant regulations, within the established framework and with the required approvals from the Ministry of Finance.

The LGA further assured that all of its financial and administrative activities are conducted in full compliance with the State’s Public Finance Act, applicable regulations, and relevant circulars.

The authority also stated that its designated media officials remain available to provide information and called on all media outlets to verify information concerning the LGA before publishing it.

The Local Government Authority (LGA) is an institution established under the Decentralization Act of the Maldives, with a primary mandate to supervise and coordinate the activities of city and island councils.