MMA targets full shift to Rufiyaa transactions by 2030

The Maldives Monetary Authority (MMA) aims to convert dollar-denominated salaries, service charges and other domestic transactions into Maldivian Rufiyaa by 2030, Governor Ahmed Munawar said Monday.

The governor was speaking at a press conference at the President’s Office on the issue of selling dollars at high prices in the black market.

Governor Munawar said the change targets a system that has been in place for 40 to 50 years and cannot be reformed overnight.

However, he said the MMA’s long-term vision is to shift all domestic transactions to Rufiyaa by 2030. This would require the tourism sector to convert rent payments to airports and the government, as well as dollar-denominated salaries paid by private companies and resorts.

He said demand for the Rufiyaa cannot increase unless such changes are made.

The governor added that foreign currency accounts for more than 40 percent of the Maldives’ money supply, making it difficult to implement monetary policy effectively.

He said positive changes in macroeconomic and budgetary policies are needed to stabilise the economy.

Outlining the future direction of the financial system, the governor said the aim is to move to a managed floating exchange rate system. However, such a system can only function successfully if the central bank has adequate reserves, noting that even in developed countries like Singapore, the rate is supported by strong reserves.

He said the MMA should have enough reserves to cover at least three to four months of imports, and expressed hope that reserves will increase over the next few years as targets are met.

Once that point is reached, he said, the broader reforms needed to strengthen the Rufiyaa will be completed.