Bill proposed to form a governing council and office dedicated to SDF

The government has submitted a bill related to the Sovereign Development Fund (SDF) to parliament.

The SDF was first established in 2017 under a Presidential decree as a fund to finance the repayment of large external debts. It has since also been used for the dual purpose of credit enhancement in economic crises.

The submitted bill contains five chapters. It defines the SDF as being established for repayment of state debt and to maintain state wealth for future generations. It details the situations under which the fund can be utilized, how it must be managed, and maintained.

Formation of a Sovereign Development Fund Act is included among President Dr Mohamed Muizzu's presidential pledges as well.

The SDF bill stipulates the establishment of a governing council to oversee the fund. Members for this council will be appointed by the President. It will be headed by the Minister of Finance. Remuneration for council members will be determined by the National Pay Commission.

The governing council will consist of seven members chosen from related fields. This includes the Finance Minister, two senior ministry officials involved with the work on the SDF fund, Maldives Monetary Authority (MMA) Governor, a senior official of MMA, a senior official of Economic Ministry and a general member from the field of business.

As per the bill, the general member will be appointed from among the applications received after a public announcement is made.

Besides the Finance Minister and the MMA governor, the term for the rest of the members will be five years.

The administrative work of this governing council will be handled by the Sovereign Development Fund Administration Office.

Funds to be deposited in the SDF are:

- airport development fee

- 10 percent of dividend earnings of state owned enterprises

- Sovereign Guarantee Fee

- Other funds that the President, on the advice of the governing council, declares to be included in the fund

Responsibilities of the governing council include drafting the basis of investing funds in the SDF, the regulations surrounding that, passing the investment policy, and reviewing fund performance and risk management.

The bill further says that the governing council must establish a dedicated investment committee for the purpose of broadening the fund.

This committee must be chaired by the Accountant General and will also include a senior official of the Finance Ministry's Debt Management Department, an official of the Fiscal Affairs Department, as well as two experts in the field of investments.

A special office must also be set up and managed under the Finance Ministry to handle all administrative work regarding SDF. A Chief Executive Officer must be appointed to this office. A person will be appointed to this post by the governing council. Further staff must be hired to conduct work in this office, as per the bill/

The bill names MMA as the custodian of SDF.