Sovereign Fund: 85 percent invested in T-Bills

Finance Ministry has said that 85 percent of the funds deposited in the Sovereign Development Fund (SDF) has been invested in T-bills and T-bonds.

According to information obtained from the ministry under the Right to Information Act, the size of the fund stands at MVR 8.9 billion. This includes MVR 5.3 billion in local currency and 233 million in US Dollars.

According to the budget book released in November last year, the SDF had USD 445 million, of which about USD 200 million was exchanged in the past three months.

Of the fund's deposits, MVR 7.6 billion is invested in government securities or T-bills and bonds. This accounts for USD 196 million and MVR 4.6 billion in T-bills and bonds.

According to the budget book, the government will withdraw USD 130 million (MVR two billion) from SDF to pay off this year's debt.

In addition to T-bills, the fund also invests in fixed deposits in banks. However, the Finance Ministry did not disclose those details. At the end of last year, the fund had a cash balance of MVR 300 million. All the remaining amounts were invested in various ways.

Because of this, any use of the fund this year, would require funds to be redeemed from T-bills or other investments. The government also plans to repay USD 310 million (MVR 4.8 billion) in debt via SDF next year.

The bulk of SDF is invested in T-bills to cover government expenditure and reduce cash flow constraints.

The Sovereign Fund was established to cover the losses caused by emergencies and repay large loans taken for developmentap projects as well as to cover the losses caused by sudden shocks to the economy.

Created in 2017, the SDF, although separate from MMA's reserves, serves as a fund storage.