Functions and Fiscal Resources

Objectives: The purpose of the report is to explore options for transferring responsibilities and fiscal resources from central govern-ment to elected local councils.

Functions and Fiscal Resources

The report has three main parts:

• Responsibilities and functions of local government

• Fiscal resources for local government

• Phases in implementing decentralization

Information in the report is based in part on a recently conducted survey of atolls and islands

Survey objectives

The survey of atolls and islands had four main objectives:

To generate accurate current information to support discussion of options for decentralisation policy

To build a management information system to guide decisions on transferring responsibilities and allocating central government funds to local councils in the future

To provide data to determine criteria and formulae for calculating block grants

To gather baseline data to be used to monitor and evaluate the impact of legislation on decentralization

Returns

Details Number

Total Number of inhabited islands in the country  196

Number of returns received from islands  109

Total usable returns  66

Infrastructure, facilities and services 66

  Utilities and Enterprises 64

  Local revenue 52

  Proposed new local revenue 30

  Shared revenue 13

  New shared revenue 12

  Sectoral Budgets and spending 24

Functions and responsibilities

Part One: Functions and responsibilities of local administrations for the delivery of public services

Functions and responsibilities

Current and proposed activities of local administrations:

Infrastructure Facilities Services Utilities Public enterprises

Section A: Existing Public Infrastructure

TABLE A1: INFRASTRUCTURE

    North South Total

   Number %

Number %

Number %

  Roads paved 0 0% 1 1% 1 1%

  Roads unpaved 28 41% 16 24% 44 65%

  Bridges 16 24% 11 16% 27 40%

  Street lighting 42 62% 21 31% 63 93%

  Storm water drains 3 4% 0 0% 3 4%

  Landing stage 1 1% 0 0% 1 1%

  Harbor 26 38% 14 21% 40 59%

 Number of islands providing information         68  

Section A: Existing Public Infrastructure

TABLE A1: INFRASTRUCTURE

    North South Total

    Number % Number % Number %

  Roads paved 0 0% 1 1% 1 1%

  Roads unpaved 28 41% 16 24% 44 65%

  Bridges 16 24% 11 16% 27 40%

  Street lighting 42 62% 21 31% 63 93%

  Storm water drains 3 4% 0 0% 3 4%

  Landing stage 1 1% 0 0% 1 1%

  Harbor 26 38% 14 21% 40 59%

 

Number of islands providing information    68      

Section A: Existing facilities

TABLE A2: EXISTING FACILITIES

    North South Total

    Number % Number % Number %

  Market place 5 7% 1 1% 6 9%

  Community center 8 12% 6 9% 14 21%

  Meeting hall 3 4% 0 0% 3 4%

  Library 1 1% 0 0% 1 1%

  Mosque 44 65% 21 31% 65 96%

  Recreation facility 10 15% 0 0% 10 15%

  Other (specify) 0 0% 0 0% 0 0%

  Number of islands providing information 68      

Section A: Existing Services

   68Number of islands providing information  

 

0%00%00%0Other if mentioned often enough 

21%1410%710%7Loan schemes  

16%119%67%5Emergency support  

1%10%01%1Skill training  

12%86%46%4Literacy programs 

22%1513%99%6Pre-schools 

76%5222%1554%37Street cleaning 

%Number %Number%Number  

TotalSouthNorth  

TABLE A3: EXISTING SERVICES

Section A: New Public Infrastructure

TABLE A4: NEW INFRASTRUCTURE

    North South Total

    Number % Number % Number %

  New Roads paved 0 0% 1 2% 1 2%

  New Roads unpaved 0 0% 0 0% 0 0%

  New Bridges 0 0% 0 0% 0 0%

  New Street lighting 1 2% 0 0% 1 2%

  New Storm water drains 0 0% 0 0% 0 0%

  New Landing stage 2 3% 0 0% 2 3%

  New Harbor 4 6% 3 5% 7 11%

  New slipway 2 3% 0 0% 2 3%

  Number of islands providing information 66      

Section A: New Facilities

A5: New Facilities

   North South Total

    Number % Number % Number %

  New Market place 2 3% 3 4% 5 7%

  New Community center 3 4% 1 1% 4 6%

  New Meeting hall 1 1% 0 0% 1 1%

  New Library 2 3% 0 0% 2 3%

  New Mosque 0 0% 0 0% 0 0%

  New Recreation facility 3 4% 3 4% 6 9%

  Other (specify) 1 1% 0 0% 1 1%

  Number of islands providing information 68      

Section B: Existing Public Utilities

   68Number of islands providing information 

21%143%218%12Solid waste disposal 

10%70%010%7Solid waste collection 

6%40%06%4Sewerage 

43%299%634%23Water distribution 

90%6131%2159%40Electricity 

%Number %Number %Number   

TotalSouth North  

Source: MOAD Survey 2007

      Functions – Public Utilities

TABLE B1: PUBLIC UTILITIES

Section B: Existing Public Business Enterprises

   68 Number of islands providing information  

        

7%53%24%3Sea transport  

32%2218%1215%10Pharmacy 

12%81%110%7Café / restaurant 

15%106%49%6Guest house  

TotalSouth North  

Source: MOAD Survey 2007

       Functions – Business enterprises

TABLE B2: BUSINESS ENTERPRISES

Section B: New Public Utilities

   68 Number of islands providing information  

4%30%04%3New Other (specify) 

15%106%49%6New Solid waste disposal 

10%74%36%4New Solid waste collection 

37%2513%924%16New Sewerage 

26%1810%716%11New Water distribution 

13%91%112%8New Electricity 

TotalSouth North  

Source: MOAD Survey 2007

       Functions - New utilities

TABLE B3: NEW PUBLIC UTILITIES

Section B: New Business Enterprises

   68  Number of islands providing information  

7%50%07%5New fuel supply 

16%116%410%7New retail shops 

28%196%422%15New Sea transport  

16%114%312%8New Pharmacy 

7%51%16%4New Café / restaurant 

38%2610%728%19New Guest house  

TotalSouth North  

Source: MOAD Survey 2007

Proposals - New Business Enterprises

TABLE B4: NEW BUSINESS ENTERPRISES

Section B: Profitability of Utilities and Enterprises

TABLE B5: PROFITABILITY OF UTILITIES AND ENTERPRISES    

    North   South   Total

Public Utilities            

  Number 45   13   58

  Profitable 25   7   32

  % profitable 56%   54%   55%

Business Enterprises            

  Number 12   4   16

  Profitable 9   1   10

  % profitable 75%   25%   63%

Part Two: Fiscal resources for local government to finance the delivery of public services

Fiscal resources

Fiscal resources

Three main types of revenue:

Revenue generated from local sources

Revenue shared between central and local government

Revenue (grants) transferred from the centre to local government

Section C: Current revenue from local sources

TABLE C1: CURRENT SOURCES OF LOCALLY GENERATED REVENUE

Number of islands providing informatio

n Taxes Fees LicensesUser

charges

Rents for land and property

Business profits

Other significant

local revenues

North total 35Number of items charged 4 1 17 31 22 8 5Number of islands charging 3 1 17 27 15 6 4Proportion of islands charging 9% 3% 49% 77% 43% 17% 11%

16Number of items charged 0 5 8 17 9 4 7Number of islands charging 0 3 8 14 6 4 4Proportion of islands charging 0% 19% 50% 88% 38% 25% 25%

51Number of items charged 4 6 25 48 31 12 12Number of islands charging 3 4 25 41 21 10 8Proportion of islands charging 6% 8% 49% 80% 41% 20% 16%

South

Total

Section D: Potential new revenue from local sources

Revenue source

Basis Assumptions Tax or Charge

(Rf)

Revenue per cap

(Rf)

Vari-ance

Max (Rf)

Min (Rf)

User charges

             

Water Litres consumed

Average 100 litres per day per property

0.01 65 17% 76 54

Solid waste

All properties

Flat fee per month Rf

10 31 37% 42 20

Market place

Stall holders

Weekly markets

10 13 43% 19 7

Harbor fee

Vessels Flat fee per month Rf

100 25 64% 41 9

Section D: Potential new revenue from local sources

Table D2: Estimates of potential revenue to be derived from new sources    

Revenue source

Basis Assumptions Tax or Charge

(Rf)

Revenue per cap

(Rf)

Variance Max (Rf)

Min (Rf)

Sales tax Shops sales

Turnover per day: Rf 1000

1% 80 32% 106 55

Property fee

All prop-erties

Flat fee per month Rf

100 303 26% 382 223

Section E: Current revenue sharing with central government

Table E1: Composition of central revenues shared with atolls

Source of revenue Rf % total

 Rent from unihabited islands 386,797 3%

 Industrial leases from inhabited islands 4,806,549 39%

 Male properties 5,984,784 49%

 Boat fees 993,325 8%

Total  12,171,455 100%

Table E2: Distribution of shared revenues among atolls    

  Atoll

Amount shared revenues 2006 (Rf) % Total Population 2006 Per capita ratio

11 Vaavu atoll 440,790 4% 1,504 4.43

8 Kaafu atoll 1,722,380 14% 9,475 2.75

14 Dhaalu atoll 425,030 3% 4,671 1.37

20 Seenu atoll 1,580,983 13% 17,762 1.34

9 Alif alif atoll 429,118 4% 4,841 1.34

12 Meemu atoll 383,810 3% 4,654 1.25

13 Faafu atoll 284,819 2% 3,624 1.19

15 Thaa atoll 605,397 5% 8,536 1.07

10 Alif Dhaalu atoll 459,817 4% 6,906 1.01

6 Baa atoll 590,045 5% 8,876 1.00

4 Noonu atoll 621,122 5% 10,080 0.93

7 Lhaviyani atoll 474,050 4% 8,226 0.87

3 Shaviyani atoll 659,984 5% 11,814 0.84

18 Gaafu dhaalu atoll 609,916 5% 11,023 0.84

17 Gaafu alif atoll 433,066 4% 7,977 0.82

19 Gnaviyani atoll 341,652 3% 7,528 0.69

5 Raa atoll 586,299 5% 14,639 0.61

1 Haa alif Atoll 518,603 4% 13,272 0.59

2 Haa dhaalu atoll 624,672 5% 16,439 0.57

16 Laamu atoll 379,901 3% 12,018 0.48

  Total 12,171,455 100% 183,865 1.00

Section F: Potential changes and additions to revenue shared with

central government

TABLE F1: PROPOSALS FOR REVENUE SHARING

Number of islands

providing information

Hotel Tax

Hotel fee

Vehicle license

Boat licenses

Commercial premises

Land for industry

Land for commerce

6

4 5 6 5 2 3 4

67% 83% 100% 83% 33% 50% 67%

7

4 4 6 7 5 3 3

57% 57% 86% 100% 71% 43% 43%

13

8 9 12 12 7 6 7

62% 69% 92% 92% 54% 46% 54%

Number of islands proposing

Proportion of islands proposing

Number of islands proposing

Proportion of islands proposing

Number of islands proposing

Proportion of islands proposing

North total

South

Total

Capital Investment

Main sources of funds for investment:

From locally generated resources (contributions)

Through MOAD for local administrations From the PSIP through MOAD (zero for all

islands since at least 2001) From donor projects Potentially through block grants for

investment puposes

Section G: Capital Investment

Table G1: Investment from MOAD budget 2004 - 2007      

Department/section 2004 2005 2006 2007

Ministry of Atolls Development        

9.13 Roads and Ports, Water and Sanitation systems 27,796,287 99,999,559 13,723,970 1,012,498

Island Development Expenditures        

9.13 Roads and Ports, Water and Sanitation systems 1,065,824   130,300,000  

Total        

9.13 Roads, Ports, Water, salination 28,862,111 99,999,559 144,023,970 1,012,498

11.02 Equity capital to public enterprises        

11.04 Capital contribution to profit oriented public agencies        

11.09 Other economic development        

Section G: Capital Investment

Table G2: Recurrent and Capital Expenditure 2006

Item Recurrent Capital Total

Amount Rf 171,595,076 6,332,007 177,927,083

Percent total 96% 4% 100%

Section G: Capital Investment

Table G3: Breakdown of Capital Expenditures 2006    

 Item

9.01 9.03 9.12 9.13

Total Furniture Equipment Communications Infrastructure

Amount (Rf) 1,260,327 3,794,342 1,080,569 0 6,135,238

Percent 21% 62% 18% 0% 100%

Block Grants for investment purposes

Main issues in determining block grants: What is the scope of investment activities

to be funded? What resources are available? Are they sufficient to provide funds for

every island every year? Should central government allocate block

grants to atolls or islands? What criteria should be considered in

allocating block grants? What formula should be applied?

Block grants

Table X1: Block grants    

  Criteria Variable Source

1 Population Population Statistics Office

2 Land area Land area (hectares) Statistics Office

3 Accessibility Distance to Male Compute from maps

4 Level of development Composite Human Vulner ability Index

VPA2, Table 15, col 6: Equal weights 2004

5 Fiscal capacity Shared revenues Inland Revenue

  Table X2: Summary of indicators for atolls          

  Indicator

Popu-lation 2007

Land Area

Distance to

Male

(hrs)  

Human Vulner-ability  

Fiscal capacity  

  Unit % total % total Index % total Index % total Index % total

  Atoll                

1 Haa alif Atoll 7% 12% 1.38 0.07 3.1 5.0% 1.69 7.8%

2 Haa dhaalu atoll 9% 15% 1.24 0.06 2.9 4.7% 1.74 8.0%

3 Shaviyani atoll 6% 7% 0.99 0.05 3.8 6.1% 1.18 5.4%

4 Noonu atoll 5% 7% 0.80 0.04 3.4 5.5% 1.07 4.9%

5 Raa atoll 8% 5% 0.78 0.04 3.8 6.1% 1.65 7.6%

6 Baa atoll 5% 3% 0.51 0.03 3.2 5.1% 1.00 4.6%

7 Lhaviyani atoll 4% 1% 0.64 0.03 3.1 5.0% 1.15 5.3%

8 Kaafu atoll 5% 4% 0.12 0.01 3.0 4.8% 0.36 1.7%

9 Alif alif atoll 3% 2% 0.26 0.01 3.3 5.3% 0.75 3.4%

10 Alif Dhaalu atoll 4% 2% 0.35 0.02 3.2 5.1% 0.99 4.6%

11 Vaavu atoll 1% 0% 0.36 0.02 3.0 4.8% 0.23 1.0%

12 Meemu atoll 3% 2% 0.64 0.03 3.1 5.0% 0.80 3.7%

13 Faafu atoll 2% 1% 0.65 0.03 3.4 5.5% 0.84 3.9%

14 Dhaalu atoll 3% 1% 0.82 0.04 3.4 5.5% 0.73 3.3%

15 Thaa atoll 5% 3% 1.03 0.05 3.2 5.1% 0.93 4.3%

16 Laamu atoll 7% 12% 1.18 0.06 3.5 5.6% 2.09 9.6%

17 Gaafu alif atoll 4% 4% 1.73 0.09 3.3 5.3% 1.22 5.6%

18 Gaafu dhaalu atoll 6% 5% 1.85 0.09 2.7 4.3% 1.20 5.5%

19 Gnaviyani atoll 4% 4% 2.24 0.11 1.6 2.6% 1.46 6.7%

20 Seenu atoll 10% 9% 2.42 0.12 2.3 3.7% 0.74 3.4%

  Total 100% 100% 20.00 1.00 62.3 100% 21.84 100%

T able X3: T he bloc k g rant model S cenario: B as e plus population

P ool of resources : Rf 1,000,000

C riteria: BasePopulation

share Land Area HVIFiscal

capacity Total

Per capita

amountWeights : 0.50 0.50 0.00 0.00 0.00 0.00

Atoll R f R f R f R f1 Haa alif atoll 25,000 13,165 0 0 0 0 38,165 7.882 Haa dhaalu atoll 25,000 18,780 0 0 0 0 43,780 6.34

etcetc

19 Gnaviyani atoll 25,000 25,766 0 0 0 0 50,766 5.3620 Seenu atoll 25,000 21,693 0 0 0 0 46,693 5.85

Total 500,000 500,000 0 0 0 0 1,000,000Average per cap national 5.44Average per cap among atolls 6.54Standard deviation 3.36SD as % average 51%Maximum 9.89Minimum 3.18

Table X4: Block grant scenariosPool of resources: Rf 1,000,000 Nat'l Atoll SD as Avge 4

average average % avge Max Min low HVI

ScenarioBase

amount Popul-ation Area Access HVI

Fiscal Cap'y Rf Rf % Rf Rf Rf

Base amount only 1.00 0.00 0.00 0.00 0.00 0.00 5.44 7.64 88% 14.35 0.93 4.26Base + population

50 / 50 0.50 0.50 0.00 0.00 0.00 0.00 5.44 6.54 51% 9.89 3.18 4.8525 / 75 0.25 0.75 0.00 0.00 0.00 0.00 5.44 5.99 28% 7.67 4.31 5.14

Base, pop, area10 / 80 / 10 0.10 0.80 0.10 0.00 0.00 0.00 5.44 5.60 11% 6.22 4.99 5.36

Base, pop, access10 / 80 / 10 0.10 0.80 0.00 0.10 0.00 0.00 5.44 5.72 16% 6.62 4.82 5.6210 / 70 / 20 0.10 0.70 0.00 0.20 0.00 0.00 5.44 5.78 21% 6.98 4.58 5.93

Base, pop, HVI10 / 80 / 10 0.10 0.80 0.00 0.00 0.10 0.00 5.44 5.88 23% 7.21 4.55 5.0810 / 60 / 30 0.10 0.60 0.00 0.00 0.30 0.00 5.44 6.32 42% 8.97 3.66 4.61

Base, pop, FC10 / 80 / 10 0.10 0.80 0.00 0.00 0.00 0.10 5.44 5.72 14% 6.50 4.94 5.2910 / 70 / 20 0.10 0.70 0.00 0.00 0.00 0.20 5.44 5.78 16% 6.70 4.85 5.26

Base + 4Pop 60, others 10 0.10 0.60 0.00 0.10 0.10 0.10 5.44 6.00 27% 7.63 4.37 5.36

Lowest HVIP 50, Acc 20, FC 20 0.10 0.50 0.00 0.20 0.00 0.20 5.44 5.90 25% 7.36 4.43 5.87

Weights for each criteria

Per capita revenue

Thank You