MMA and Pension Office made a secure transaction: Finance

The Finance Ministry has said today that the Maldives Monetary Authority (MMA) investing in the pension fund and funding a government bond through the pension fund is a financially secure transaction, and it was not done in order to print money.

Last week, the Pension Office board passed a transaction to sell a government bond to the secondary market with MMA.

In relation to opposition comments regarding the printing of money which goes against President Dr. Mohamed Muizzu's announcement that such a thing would not be done, a Finance Ministry senior official stated that the transaction is a planned "investment arrangement". The official also said that opportunities will arise for secure investments to be made to the pension fund as a "government instrument".

"This is not a form of monetization or money printing. It is a financial transaction made on a market basis through the designated legal framework. MMA joining the secondary market is a move to maintain financial stability and is a common resource used internationally in managing liquidity as best as possible for the economy," said the official.

The official stated that the result of the financial transaction from the MMA and Pension Office is the facilitation of securing funds in payments that have been inherited from former President Ibrahim Mohamed Solih's administration.

As per the current government, there was approximately MVR 9 billion in unpaid payments to private contractors and companies when President Muizzu took office.

The official stated that it had resulted in a heavy financial burden, with hundreds of Maldivian businesses experiencing a delay in payments.

As the official outlined, in order to further secure Maldives' monetary stability, the minimum reserve requirements of commercial banks were raised from 10 percent to 11 percent. The official also said that it will bring extra liquidity back into the system, help oversee the MMA's Rufiyaa supply and bolster open market operations in stabilizing Maldives' liquidity.

"This was not a form of dangerous spending. These are changes being brought about to stabilize the state's financial status. A large portion of the funds that will be acquired will be spent on past projects that have gone unpaid," said the Finance Ministry official.

"It contains planning budgets without considering best practices and releasing funds to finished projects due to the delay."

Former Finance Minister Ibrahim Ameer stated last night that MMA investing in the pension fund and money being routed from the pension fund in order to invest in a Finance Ministry bond is against the Fiscal Responsibility Act. Ameer also said that it is basically the act of printing money as well.

As per Ameer, MMA does not have the capability to buy a MVR 2.5 billion T-Bill through the Pension Office without printing money.