Saruvash resigns from Pension Board amidst MMA bond issue

Pension Office board member Ahmed Saruvash Adam resigned today amidst the issue where a MVR 2.4 billion bond was sold to the Maldives Monetary Authority (MMA) in order to manage government spending.

Saruvash stated in a post on X that he resigned from the board today and that the bond sold to MMA would bring about further economic challenges. He also wrote that along with legal issues, the fiduciary or issues regarding the responsibilities of monetary management via the Pension Office would also surface.

Such a transaction occurs when government T-Bills that are in the pension fund are sold to MMA. The Finance Ministry has also requested the Pension Office for the sale of additional T-Bills, an amount totaling around MVR 2.5 billion. And so, the government will receive funds from the T-Bill sold by the Pension Office to MMA.

Three out of five Pension Office members voted for the transaction, with two against. As per sources, board Chairperson Ahmed Inaz was also against the transaction. However, he did not take part in the vote.

There has been no news from the Pension Office regarding this transaction.

As per Saruvash's resignation letter, the Pension Office was an intermediary in the transaction.

In the Finance Ministry's note, they stated that they need the funds in order to meet their budget requirements, as per Saruvash's letter. The letter reads that the sale of a T-Bill bond from the pension fund was submitted in order to meet their budget, but the pension fund did not have the liquidity to do so.

The letter further stated that investing in a government bond after acquiring the funds from MMA is a transaction to provide funds to the government via the pension fund.

"There is no difference between the results of this transaction and the release of funds from MMA to the government. And so, I urge that a deeper look of the transaction or a "substance over form" be taken into account," as per the resignation letter.

Saruvash said that the transaction goes against state fiscal responsibility and no legal opinion was sought when looking at the documents that were submitted.

With the transaction that was made between MMA and the government with the Pension Office as an intermediary, the Rufiyaa supply would have to see an increase or USD from the reserve be converted, as per Saruvash.

No matter what path is taken, the Rufiyaa supply would increase as a result of the transaction, said Saruvash.

Saruvash's resignation letter also raised his concern, stating that the transaction was not conducted in a transparent manner, even as it is known that the pension fund is linked to various other parties.

The Finance Ministry has said 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 the same as printing money.

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".