But Bitcoin is designed so that each user stores coins in a non-custodial wallet.
Sure, but what's good for an individual person is not always suitable for a state or large organisation. It's hard to imagine that private key(s) to an entire nation's bitcoin investment would be held either by a single official or a group of officials (for multisig wallets). Government employees are not famous for being too security-focussed or for taking their roles seriously. They probably wouldn't want such responsibility anyway.
So, in this case, using a trusted, centralised service, with all the insurance etc, seems perfectly justified.
I think that the private keys will belong to a private company that wins the tender and will be very close to the state. The company will first pursue a very correct and open policy in order to attract many users, and then the conditions will worsen and the number of blockings will increase. This is one of the financial traps for citizens.