The Maldives’ target is to build up US$100 million in its Sovereign Development Fund (SDF) by the end of the year, Minister of Finance Mohamed Shafeeq said during a press conference on Thursday. The Fund totalled US$2 million when the current administration took office, the minister said.

“We are working very hard to build the Sovereign Development Fund. The fund was at US$2 million on 17 November and (the amount) has increased by US$50 million to date… Our target is to increase the fund to US$100 million by the end of this year. We believe it is important to diversify our debt portfolio to raise the money needed by the state,” Shafeeq said during the Finance Ministry’s press briefing.

The state’s external debt payments for 2024 and 2025 are estimated at US$500 million per year, with 2026 debt payments projected at US$1 billion.

Shafeeq noted that the administration’s main priority was to reduce spending, specifically at state-owned enterprises (SOEs).

“I think the SOE reform programme is important. Expenditure by state-owned enterprises should be more efficient. Costs should be reduced,” he said.

The financial statements of more than 25 SOEs are being regularly reviewed to reduce costs, he said.

The SDF was established by President Abdulla Yameen Abdul Gayoom with the stated objective of cushioning the state from a debt default due to unforeseeable shocks to the nation’s economy.

Initially set up as a US dollar-denominated fund, prior to the Covid-19 crisis, the shortage in US dollars (USD) during the pandemic saw the accumulated funds converted to Maldivian Rufiyaa (MVR) on 30 December 2020 under the Ibrahim Mohamed Solih administration.

One of the first orders of business for the current Muizzu administration had been to reconvert the fund, and subsequent deposits, to USD.