An audit report has revealed that from 2017 to 2023, the Sovereign Development Fund was used contrary to its intended purpose for purchasing T-bills and issuing loans. The misuse of the Sovereign Development Fund was disclosed in the “Review of Sovereign Development Fund 2017 to 2023” report released by the Auditor General’s Office. According to the audit report, before the amendment to the Public Finance Act in 2023, the fund was being used without a formal specific law. The stated purpose for establishing this fund at that time was to repay state debt. Although the fund was created for this purpose, the money in the fund began to be converted to Maldivian currency under an agreement signed between the MMA and the Ministry of Finance in December 2019. The Audit Office stated that this agreement was terminated on September 12, 2023. It has been decided to convert the amount changed to Maldivian currency back to dollars as per an agreed method.
As a result, by the end of 2023, out of the total 7.5 billion rufiyaa in the fund, 65 percent was in Maldivian rufiyaa. That is approximately 4.9 billion rufiyaa. Only 35 percent or 170.25 million US dollars remained in the fund in dollars. Excluding money in various investments, the fund had only 10.91 million rufiyaa in cash by the end of 2023. In dollars, there was only 17.58 million dollars.
By the end of 2023, 88 percent of this fund, created for the purpose of debt repayment, ha repayment, had been used for purchasing T-bills. A total of 6.566 billion rufiyaa had been spent solely on buying T-bills. Of this, 138.74 million dollars were spent on purchasing T-bills in dollars. The remaining 4.4 billion rufiyaa was spent in Maldivian rufiyaa.
While a large portion of the fund has been used for T-bills to cover state expenses, the Audit Office has noted that this is completely contrary to the fund’s intended purpose. Furthermore, the audit report has highlighted that with a large amount of debt due to be paid in 2025 and 2026, investing in T-bills in this manner will make it difficult to use the money in the fund. The audit report shows that loans have also been given to state-owned companies from the fund’s money. The Audit Office has noted that while the fund’s money has been used in this way, proper documentation has not been maintained.
While the Sovereign Development Fund has been misused, the current government has submitted a bill to the People’s Majlis to establish guidelines for the use of this fund and its management. When this bill was first presented to the 19th Majlis, it was rejected by the then MDP-majority parliament.
