Finance minister Ameer answers questions from lawmakers during a parliament sitting. (Photo/ Parliament)

Parliament approves bill authorising minister's control over sovereign fund

In Monday's sitting, 43 members voted in favour of the bill, while only one voted against it.

27 February 2023

Parliament on Monday [assed an amendment by the government to give the Sovereign Development Fund’s (SDF) legal powers to the finance minister to manage it.

The bill submitted by Mohamed Mumtaz of Fuvahmulah South constituency on behalf of the government was reviewed by the public finance committee.

In Monday's sitting, 43 members voted in favour of the bill, while only one voted against it.

One of the key amendments in the bill that was introduced in the second session of parliament last year was the clauses that give legal weight to the SDF. 

  • Deposit of funds in SDF and how to spend from the fund will be decided on the advice of the finance minister

  • The finance ministry will do all the maintenance of the fund

Parliament's public finance committee has made some changes to the bill, but it will not change any clause related to the SDF. With the bill now passed, the SDF will be a fund to be maintained under certain provisions of the Public Finance Act.

The clauses proposed in the Bill to add to the Public Accounts Act with respect to SDF are as follows:

  • SDF funds should be kept by opening a separate account in MMA 

  • SDF should not be merged with public bank account

  • President must set up a five-member committee to decide how to invest sovereign funds

  • The committee has to be constituted on the recommendation of the finance minister

  • Regulations for running SDF should be written under public finance

  • Should be audited and accounts prepared

At present, the SDF is managed by central bank  MMA. Yet, all decisions related to depositing and spending money into the fund are taken by the finance minister and the president. There have been concerns from various quarters that foreign currency in the fund is being marketed in local currency.  

One of the most notable amendments made by the Public Finance Committee to the bill is the change in the clause that empowers only the minister to borrow money in the name of the state and issue guarantees. After consultations with the relevant authorities, the committee concluded that as is already in the law, it is a decision taken by the president when the finance minister submits it to the president.