The government has resorted to money printing and acquiring the money through the Pension Office.
Credible sources told Adhadhu that the transaction was being conducted after the the central bank Maldives Monetary Authority (MMA) invests MVR 2.5 billion in the pension fund, which will then invest the money in a finance ministry bond.
"This is printing money," said one person familiar with the transaction.
Sources told Adhadhu that the Pension Office gave approval to the transaction earlier this week.
The Pension Office, the MMA and the government have not yet commented.
Money printing is the process of increasing the money supply. Central banks can create new money to buy assets like government bonds. This can lead to inflation and devalue the currency.
When the MMA invests in the Pension Fund, and when the Pension Office gives the money to the government, that becomes money printing.
"Even if money is printed in this way, the value of the Rufiyaa will depreciate and the amount of in circulation will increase. Inflation will rise and the parallel market will deteriorate further," an economist said.
"So businesses [will have difficulty getting dollars] and will face more challenges."
Earlier this year, there were attempts to print MVR 14 billion to buy a land plot in Hulhumale' for MMA. This failed after public criticism.
Two members of the MMA's board resigned due to the decision.
At the time, former President Mohamed Nasheed warned that the price of dollars will increase to MVR 24 per dollar if money is printed.
The black market rate has been at above MVR 20 per dollar for months due to the government's foreign exchange policy.
This has increased prices of goods and services as businesses struggle to find dollars for imports.
Muizzu has repeatedly emphasized his policy to bolster the economy without resorting to money printing.
He asserted that printing money is not a solution for the country's economic recovery and claimed his administration was dedicated to improving the economy without devaluing the local currency.
