MMA will act to manage pension bond deal pressure, governor says
Munawwar said the MMA views the proposal as an investment, but added that the central bank would adjust monetary policy if required.
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Governor of the Maldives Monetary Authority (MMA), Ahmed Munawwar, told the Parliamentary Budget Review Committee on Saturday that the central bank will take necessary steps to manage any market pressure arising from a proposed pension fund investment in government bonds financed through the MMA.
The Pension Office board has decided to invest MVR 2.4 billion in a government Treasury bond, to be financed by the central bank. The proposal has now been formally submitted to the MMA.
Munawwar appeared before the parliamentary committee reviewing next year’s state budget, where Kanditheemu MP Ameen Faisal (MDP) and Central Hithadhoo MP Ahmed Azaan (PNC) questioned him on the potential impact of the transaction.
The MPs noted that the move could affect market prices and the dollar exchange rate, as the arrangement may result in the withdrawal of currency that is not currently circulating in the market.
Responding briefly, Munawwar said the MMA views the proposal as an investment, but added that the central bank would adjust monetary policy if required.
“On the advice of the board, we will make any necessary changes to monetary policy, even if that includes open market operations,” he said, without providing further detail.
The Finance Ministry has proposed that the Pension Fund invest in a new MVR 2.5 billion Treasury bill. This would involve the Pension Fund using proceeds from the sale of its existing T-bills to the MMA and reinvesting them into the new instrument offered by the government.
