The Maldives’ Pension Office said the Ministry of Finance and Planning’s proposed MVR 2.4 billion bond investment will not negatively impact the Pension Fund, despite widespread criticism of the transaction.
In a statement issued yesterday, the Pension Office said the proposal involves an investment structured to generate returns in both Maldivian Rufiyaa (MVR) and United States Dollars (USD). The office said the bonds would be purchased using proceeds from the sale of bonds in the securities market.
The Pension Office’s board approved the transaction in late October. Following the decision, board member Ahmed Saruvash Adam resigned that month, while board chairperson Ahmed Inaz stepped down earlier this week amid growing public scrutiny of the deal.
“I have resigned from the Pension Board after the decision to proceed with the MMA-financed bond. I believe it raises serious legal, fiduciary and economic concerns, and I chose to step down to uphold the principles of prudence, integrity and institutional independence,” Saruvash said in a post on X following his resignation.
Inaz also cited concerns over the proposal, warning that it does not provide a sustainable solution at a time when he described the Maldives’ fiscal position as rapidly deteriorating. He said he resigned because he believed financing the transaction through the Maldives Monetary Authority (MMA) could be harmful to the economy and risk worsening existing financial pressures rather than addressing structural challenges.
Despite his criticism, Inaz said he hoped the state’s finances would be strengthened through forward-looking reforms, enabling the Maldivian economy to overcome its debt burden and return to a path of sustainable and productive growth.
In its statement, the Pension Office said the MVR 2.4 billion government bond investment was made in consultation with advisers involved in developing the long-term investment strategy of the Maldives Retirement Pension Scheme. The office said the bond would allow the pension fund to build a foreign currency reserve as an investment without purchasing foreign currency directly from the market.
The Pension Office maintained that the transaction was conducted in accordance with the Pension Act and relevant regulations.
Under the proposed structure, the Pension Fund would sell government bonds worth MVR 2.4 billion to the MMA and then use the proceeds to purchase a government bond valued at MVR 2.5 billion. If implemented, the transaction would increase the government’s domestic debt by MVR 2.5 billion.
Economists have raised concerns that the move could further strain the Maldives’ financial position and create additional economic challenges.
Documents related to the proposal show that the Ministry of Finance has introduced a dual-currency Treasury Bond, with investments and returns structured in both MVR and USD. The bond has a total value of MVR 2.4 billion and aims to generate returns through exposure to both currencies.
