Former Maldivian Democratic Party (MDP) chairperson Fayyaz Ismail on Sunday warned that the Muizzu government is heading towards economic distress borrowing, following high-profile resignations from the Maldives Pension Administration Office (MPAO) over a controversial MVR 2.4 billion bond plan.
Fayyaz made the remarks on X while reposting a statement by Ahmed Inaz, who resigned as chairperson of the MPAO earlier in the day. Inaz previously served as finance minister under former president Mohamed Nasheed.
“Whilst Dr Mohamed Muizzu bludgeons the constitution and railroads democracy, he pursues nothing short of economic ruin,” Fayyaz said. He accused the government of expanding the state instead of carrying out fiscal reform, and said current policies have pushed the country into a debt refinancing crisis.
Fayyaz said government rhetoric on fiscal discipline and state-owned enterprise reform was misleading, arguing that last year only around 15 percent of budgeted grants were secured. He said salaries and wages increased by more than MVR 1 billion in 2025 alone, while state spending outpaced revenue growth.
“Businesses are still owed billions by the state. Infrastructure stalled while FX policy failed. Households are bearing the cost through rising prices,” he said.
Fayyaz also warned that the latest bond plan, which critics have described as money printing, would not convince international investors. He said markets were likely to demand interest rates of 14 percent or higher for future borrowing, calling it distress borrowing rather than refinancing.
“This is not something an independent sovereign state does,” he said, adding that the yield reflects the risk premium being priced in by markets amid policy failures and rising uncertainty.
His comments followed Inaz’s resignation from the MPAO board over the government’s plan to raise MVR 2.4 billion through a bond involving pension funds and the Maldives Monetary Authority (MMA).
Inaz said on X that raising funds for the transaction through the MMA was detrimental to the economy and did not offer a sustainable solution at a time when state finances are deteriorating. He said repeated discussions failed to resolve his concerns.
“I am not convinced that the proposed MVR 2.4 billion bond issue has led to a sustainable solution,” Inaaz said.
He is the third board member to resign over the issue, after Ashraf Rasheed and Ahmed Sarvash Adam stepped down earlier. The Pension Office’s chief finance officer Hawa Fajwa has also resigned after refusing to sign documents linked to the transaction.
The bond plan involves the pension fund investing in a bond linked to the MMA, with proceeds used to meet government financing needs. Critics say the structure amounts to indirect money creation using pension savings.
“Markets are watching. So are all Maldivians,” Fayyaz said, thanking Inaaz for standing his ground.