Sujatha Haleem, the Chief Executive Officer of the Maldives Pension Administration Office (MPAO) on Tuesday announced resignation.
Her resignation comes hot in the heels of recent revelation of MPAO board’s now heavily lambasted decision to proceed with a government-requested utilization of pension funds.
Sujatha’s resignation follows a series of high-profile departures from the Pension Office, with both the Chairperson of the board, Ahmed Inaz and board member representing the private sector, Saruvash Adam stepped down from their MPAO board positions in protest against a proposed transaction involving the investment of pension funds into government bonds.
Besides Inaz and Saruvash, MPAO’s Chief Financial Officer, Hawwa Fajwa had tendered her resignation following the contentious decision as well.
This new investment is a result of Maldives Monetary Authority (MMA) investing MVR 2.5 billion into the Pension Fund.
Financial experts have voiced the move with concerns, labelling it as a form of ‘money printing’ and adds it poses significant risks to both the Pension Fund and national economy.
Despite the warnings and preceding resignations, the current MPAO Board chose on Monday to approve fund utilization as requested by the government.
Amidst growing public criticism, it has come to light that, MPAO’s CEO Sujatha has informed her staff the decision to step down from the position. She was appointed for the role on October 21, 2022 after serving as the Acting CEO.
In a statement released on Monday to address public concern, Pension Office clarified that the Ministry of Finance had proposed an investment of MVR 2.4 billion in a “dual currency” treasury bond, designed to yield returns in both Maldivian Rufiyaa and US Dollars.
Pension Office also highlighted that a key advantage of this transaction is the creation of a foreign currency reserve within the Pension Fund through investment, without the need to purchase foreign exchange from the market.
The office says converting treasury bills into long-term bonds would extend the average duration of the portfolio and enhance overall returns.
While speaking with a local outlet, Saruvash Adam – the first to resign from the Board – said his resignation letter emphasized the problematic nature of the transaction. In his letter, Saruvash said that while a market transaction is still acceptable, central bank’s involvement in it makes it problematic.
He argued that when MMA releases funds in this manner, it increases the money supply – currency in circulation is affected subsequently as well – which is effectively equivalent to printing money. He warned that such an increase in currency circulation is likely to drive up inflation and cost of living.
Public concerns on the matter continue to mount while many have warned that allowing government intervention in the Pension Fund – which holds the savings of approximately 200,000 contributors – poses a significant financial risk.