The Maldives Pension Administration Office (MPAO) board approved a controversial MVR 2.4 billion bond transaction on Monday, a day after its chairperson resigned and despite repeated warnings from former finance ministers and opposition figures, according to sources familiar with the decision.
The approval followed a board meeting convened after the appointment of an interim chairperson. The identity of the interim chair remains unclear. Sources said the board authorised the transaction, but details of the meeting, including quorum, voting and documentation, have not been revealed.
The decision came a day after Ahmed Inaz resigned as chairperson, citing concerns over what he described as “illegal money creation” using pension savings. In a post on X on Sunday, Inaz said the transaction structure, involving the Maldives Monetary Authority (MMA), was detrimental to the economy and failed to offer a sustainable response as state finances deteriorate.
Inaz said he attempted to resolve the matter through discussions, but no agreement was reached. He previously served as finance minister under former president Mohamed Nasheed.
Inaz was the third board member to resign over the issue. Board members Ashraf Rasheed and Ahmed Sarvash Adam stepped down earlier. The Pension Office’s chief finance officer, Hawa Fajwa, also resigned after declining to sign documents linked to the transaction.
Former finance minister Ibrahim Ameer said the arrangement was not a conventional bond issuance but a financing transaction designed to channel liquidity from the central bank into government operations using pension funds.
In a statement on Sunday, Ameer warned that forcing the Pension Office to fund government operations, supported by central bank liquidity, was a serious policy error, particularly with Sukuk maturity approaching. He said the fiscal crisis was avoidable and accused the Muizzu government of abandoning prudent debt management and waiting until the last moment to seek financing.
Ameer said the use of pension funds for short term government financing, combined with a lack of transparency in fiscal reporting, had further undermined investor confidence. He contrasted the current approach with debt management actions taken in 2021, when refinancing risks were addressed well ahead of maturity and supported by institutional reforms.
Former Maldivian Democratic Party (MDP) chairperson Fayyaz Ismail also criticised the decision. Reposting Inaz’s statement on X, Fayyaz warned that the Muizzu government was heading towards distress borrowing.
Fayyaz said state spending continued to outpace revenue growth, while businesses were owed large sums and households faced rising prices. He said the MVR 2.4 billion transaction, which critics have described as indirect money creation, would fail to reassure international investors and could push future borrowing costs to 14 percent or higher.
Neither the Pension Administration Office nor the government has publicly disclosed details of Monday’s board meeting or responded to the resignations and warnings.