The Sovereign Development Fund (SDF) was used to purchase treasury bills and issue loans between 2017 to 2023, in contradiction to its intended purpose, an audit report has found.
The misuse of the SDF was detailed in the "Review of Sovereign Development Fund 2017 to 2023" report published by the Auditor General's Office. The audit report highlighted that that prior to the 2023 amendment to the Public Finance Act, the fund was operated without a formal law or legal framework.
Although the SDF was established to support the repayment of public debt, the report notes that the funds were converted into Maldivian currency in December 2019 under an agreement signed between the central bank, Maldives Monetary Authority (MMA) and the Ministry of Finance. The agreement was later terminated on 12 September, 2023, the Audit Office noted. It was agreed that the amount converted into Maldivian currency would later be converted back into US dollars.
As a result, by the end of 2023, of the USD 486.72 million accumulated in the fund, 65 per cent, amounting to USD 317.77 million, was held in Maldivian Rufiya. Meanwhile, only 35 per cent or USD 170.25 million remained in US dollars. At the end of 2023, excluding other investments, the fund’s cash holdings was at USD 707,547 in Maldivian Rufiya, and just USD 17.58 million in dollars.
The audit further revealed that by the end of 2023, 88 percent of the fund had been used to purchase treasury bills, amounting to USD 425.82 million. Of this amount, USD 138.74 million was spent for the purchase of T-bills in US dollars. The remaining USD 285.36 million was in Maldivian Rufiya.
The Audit Office also revealed that that while the majority of the fund had been used to cover government expenditure, this is against the fund’s intended purpose. In addition, while a significant amount is due for debt repayment in 2025 and 2026, the audit report noted that the investment in the T-bill hinders the fund’s accessibility when most needed.
The audit report also revealed that government-owned companies had been issued loans from the fund. However, proper documentation had not been properly maintained.
The present government has introduced a bill to the 20th Parliament to formulate the regulations for the utilisation and management of the fund. A similar bill was presented to the 19th Parliament, then dominated by the opposing Maldivian Democratic Party (MDP). However, the bill was not accepted by the Parliament.