Nasheed: 40% USD revenue exchange requirement a threat to investor confidence

Former President Mohamed Nasheed has warned that mandating resorts to sell or exchange 40 percent of their US dollar revenue to the Maldives Monetary Authority (MMA) poses a significant threat to investor confidence and the long-term stability of the tourism sector.

Addressing the ongoing US dollar challenges in a post on X, Nasheed stated that forcing a substantial portion of resort dollar earnings to be exchanged with the state is a policy that could lead to severe adverse economic consequences. He highlighted that many resorts carry significant debt obligations that must be serviced in US dollars.

Furthermore, Nasheed noted that most resorts are foreign investments largely financed through bank loans. He emphasized that the primary draw for foreign investors to the Maldives is the prospect of competitive returns, and undermining this incentive casts a negative shadow over the industry’s future.

"Forcing resorts to exchange 40 percent of their US Dollar revenue to the MMA is a policy that could result in significant negative economic outcomes. Most resorts have substantial debts that must be settled in dollars," Nasheed’s post read.

He added that eroding investor motivation is a risk to the long-term stability of the tourism sector and the trust of international investors.

Nasheed’s remarks follow an announcement by MMA’s Governor Ahmed Munwar, who revealed plans to amend foreign exchange regulations to require resorts to exchange 40 percent of their dollar revenue through local banks—an increase from the previous requirement of 20 percent.

Speaking at a press conference at the President’s Office alongside three cabinet ministers, Governor Munawar stated that the proposed amendments also include changing the exchange frequency from every three months to every month. He further noted that despite temporary market fluctuations due to regional conflicts, there is no fundamental reason for the dollar rate to be this high, attributing the issue to speculation and rate manipulation.

In response to the Governor’s announcement, the Maldives Association of Tourism Industry (MATI) released a statement expressing deep concern, emphasizing that mandating the exchange of 40 percent of dollar revenue is an unsustainable burden for tourism sector businesses.

The association’s statement clarified that during a meeting with the MMA Governor earlier this month, the initial proposal was to replace the existing requirement of exchanging USD 500 per tourist with a uniform 20 percent exchange rate for all Category A establishments. MATI expressed alarm that shortly after this meeting, the proposed rate was doubled to 40 percent without further consultation.