Sovereign Fund management botched; balance unsure: Audit Office
The government has proposed some amendments related to the management of sovereign funds in the Finance Act.
By
Ahmed Naif
The Auditor General's Office has found that the Sovereign Development Fund (SDF) has been mismanaged that the money claimed to be in the fund cannot be verified.
A report prepared by the audit office on the budget's expenditure in 2020 states that the SDF's accounts are handled in the System Application Product (SAP) system that maintains state finance accounts. However, due to the arrangement of the system, the total SDF is being calculated manually, the audit office said. In view of this:
-
At the end of 2020, the authenticity of MVR 566 million recorded in SDF's bank account could not be ascertained
-
Even if the figures show that the total amount of the entire fund with investment is MVR 6.9 billion, it has not been ascertained to be true
-
Manual scrutiny of SDF calculations fails to establish the figures
The office's report recommended improvements:
-
Strengthen the SDF management by bringing in a robust legal framework for the fund in line with the policy paper approved by the Cabinet in 2016 to set up the SDF
-
Separately record the expenses incurred by the SDF and maintain a separate account for the same
Sovereign Fund:
-
Total of sovereign funds (including the amount invested) – MVR 5.1 billion
-
In sovereign fund's bank account - MVR 98.7 million
-
Deposits estimated by the end of the current financial year - MVR 669.2 million
-
Earned through investment - $3.1 million
-
Sovereign funds have invested the most in fixed deposits of foreign banks
-
The estimated returns from these investments are estimated at MVR 13 billion
The government has proposed some amendments related to the management of sovereign funds in the Finance Act. The government will also introduce a special law for the sovereign fund, it said.
The sovereign fund was maintained in dollars before Covid-19, but the dollar in the fund was exchanged for Rufiyaa. The minister said the process of converting the fund back into dollars has been initiated.
