The Maldives Pension Administration Office (MPAO) on Tuesday defended a planned MVR 2.4 billion transaction involving the sale of treasury bonds to the Maldives Monetary Authority and reinvestment in a new Finance Ministry bond, as criticism of the deal continues.
In a statement, the MPAO said the Finance Ministry had proposed investing a total of MVR 2.4 billion in bonds denominated in Maldivian Rufiyaa and US dollars.
The office said the investment would be funded by selling MVR 2.4 billion worth of existing treasury bonds in the secondary market and using the proceeds to purchase the new bond. It said the bonds would be sold at no loss, which would increase overall portfolio returns.
According to the statement, the transaction would create foreign exchange reserves for the pension fund through investment, without purchasing foreign currency from the market. The office added the deal would also convert part of its existing short term treasury bills into long term treasury bonds and improve returns over time.
The defence comes a day after the MPAO board approved the transaction, despite repeated warnings from former finance ministers and opposition figures, and following a series of resignations linked to the decision.
Former chairperson Ahmed Inaz resigned on Sunday, saying the transaction amounted to illegal money creation using pension savings and would harm the economy. Two board members and the pension office’s chief finance officer had stepped down earlier over the issue.
Former finance minister Ibrahim Ameer said the arrangement was not a standard bond issuance but a financing transaction designed to channel central bank liquidity into government operations. He warned it posed serious risks, especially with the Sukuk maturity approaching.
Former Maldivian Democratic Party (MDP) chairperson Fayyaz Ismail also criticised the move, warning the transaction would deepen economic distress and undermine investor confidence.
Neither the Pension Administration Office nor the government has disclosed details of Monday’s board meeting, including quorum and voting, or addressed the resignations tied to the transaction.