The Maldivian Parliament has commenced deliberations on the Sovereign Development Fund (SDF) Bill, a crucial piece of legislation aimed at establishing a legal framework for the management and utilisation of the Sovereign Development Fund. The Bill, introduced on 10 June by Ali Fazad, the Member of Parliament (MP) for Central Fuvahmulah, represents a significant step in the administration’s efforts to ensure fiscal stability and economic resilience.
The proposed legislation seeks to formalise the structure and operational rules governing the SDF, which was originally established to bolster the country’s capacity to repay external debt. By accumulating and maintaining foreign currency reserves, the Fund aims to provide a financial buffer that ensures debt repayment capability and offers reserves to mitigate the impact of sudden economic shocks.
Funding for the SDF is sourced from multiple streams, including airport development fees, 10 percent of the state’s income from dividends of state-owned enterprises (SOEs), and fees from the issuance of sovereign guarantees. Additionally, the President has the discretion to deposit other funds into the SDF upon the advice of a Governing Council.
According to the Bill, the amount to be deposited into the SDF will be determined by the President, based on the recommendations of the Governing Council and considering the total external debt of the nation. This approach aims to maintain a balance between current fiscal needs and future financial security.
The SDF Bill is not a new initiative; it was initially proposed during the previous 19th parliamentary session by the current administration but faced rejection. This renewed effort underscores the administration’s commitment to establishing a robust framework for managing external debt and safeguarding the nation’s economic future.
As parliamentary debate continues, the outcome of the SDF Bill will be closely watched by economic analysts and stakeholders, given its potential to significantly impact the fiscal policy and economic stability of the Maldives.
