Sovereign Development Fund MVR 279 Million Less than Previous Year

The Sovereign Development Fund established by former President Yameen Abdul Gayoom is significantly less compared to the previous year.

Weekly figures published by the Ministry of Finance shows that only MVR 159.2 million was acuumulated by June 10. This is MVR 279.1 million less than last year, a significant reduction.

The fund was to be used for economic recovery, loan repayment and loan guarantee. It is obtained via airport development charges and other services of passengers at Velana International Airport (VIA). The fees are USD 25 for foreigners, and USD 12 for locals.

During President Ibrahim Mohamed Solih's tenure, the fund has been greatly limited. Due to Maldivian borders closing in 2020 due to COVID-19, not much funds were collected. Since November 5, MVR 269 million was deposited to the reserve.

Nevertheless, income for 2019 is inconsistent with the number of travelers. It is speculated that not all of the airport development charges are being deposited into the fund.

The main purpose for collecting the charges are to preserve cash inflow. However, the government has depleted most of the fund's dollars, using USD 120 million of the USD 200 million left over in 2019. Recently, Fitch declared that the reserve only had USD 54 million left. Considering the state's spending, the fund is expected to be depleted in the coming months.

Moody's Investors Service on May 21 released a report predicting that if the government diminishes the fund, they may be unable to recover the USD 250 million when it is needed.

Experts consulted before the fund was established advised transactions to be carried out through the parliament. The former administration was working towards enforcing the rule, until the new government brought it to a halt. This allowed the government to use the reserve as they pleased.