Audit finds Sovereign Development Fund lacked debt repayment plan until 2023

The Auditor General's Office has revealed that the Sovereign Development Fund (SDF) was managed without a clear plan to address Maldives' mounting debt until 2023.

According to the audit report covering the fund’s operations from 2017 to 2023, the SDF held MVR 7.5 billion at the end of last year. 65 percent of this amount was held in MVR and the remaining 35 percent in US dollars.

However, data obtained by Mihaaru through the Finance Ministry under the Right to Information Act in February 2024 indicated that the fund’s current value had increased to MVR 8.9 billion.

Despite the fund’s growth, the audit highlights that it currently meets only 55 percent of this year’s debt service requirements. Maldives is expected to repay approximately MVR 32 billion in debt this year and next — the highest amount ever allocated for debt repayment in the country’s history. This figure represents 80 percent of the government’s total projected revenue of MVR 39 billion for 2025.

The audit also raised concerns over the fund’s investment strategy. It revealed that 88 percent of the fund's assets were invested in government Treasury bills (T-bills), instruments traditionally used for short-term government spending. According to the report, these T-bills are frequently rolled over upon maturity, making them an inefficient tool for long-term debt repayment.

The SDF was established in 2017 with the stated goal of supporting government debt obligations. However, the audit found that the fund was not managed robustly and that its accounts did not consistently adhere to high accounting standards.

The report further recommended that a comprehensive legal framework be developed to guide the fund’s operations. It also called on the Ministry of Finance to publicly release an investment policy and risk management framework for the SDF.