The Sovereign Development Fund Act has been introduced to parliament, aiming to regulate access to the fund under specific circumstances. Proposed by parliamentarian Ismail Naseem, the bill seeks to establish a legal framework for managing funds dedicated to government loan repayments, aligning with President Dr. Mohamed Muizzu's commitment.
The primary objective of the bill is to safeguard the nation's wealth for future generations through the establishment of a Sovereign Development Fund and its associated policies. It portrays the government's key responsibilities concerning the fund, including management, investment strategies, and the appointment of a trusted fund manager.
Contributions to the fund are outlined in four ways: through contributions to the airport development fund, 10% of state-owned enterprises' dividends, revenue from Sovereign Guarantee fees, and payments to the President's fund recommended by the governing council. Meanwhile, the bill proposes access to the fund is permitted only in two scenarios: when the government's public account cannot repay loans or to address the country's budget deficit during an economic crisis.
President Dr. Mohamed Muizzu expressed concern over the depletion of the Sovereign Development Fund's reserves by the previous administration upon assuming office. He noted that the fund was inadequate for loan repayments due to its complete utilization. Within the initial three months of his administration, President Dr. Muizzu's government managed to raise USD 30 million for the fund. Minister of Economic Development and Trade Mohammed Saeed confirmed that the fund initially contained USD 2.6 million.
The bill proposes the establishment of a governing council, appointed by President Dr. Muizzu, within the Maldives Monetary Authority (MMA) to oversee the fund's cash flow. It also suggests that fund investments be managed by an investment committee assembled by the governing council and advocates for the creation of a Sovereign Development Fund Administration Office.
Operating as a distinct fund under the Finance Act, the Sovereign Development Fund grants the president full authority over its management as per the law. The government's proposal ensures that the fund can only be abolished with parliament members' approval. Initially established in 2017 to aid government loan repayments, the fund's purpose remains unchanged.