MDP vows 'direct political action’ against govt over USD exchange requirement

The National Council of the Maldivian Democratic Party (MDP), on Monday night, has passed a resolution to initiate direct political action against legislative changes requiring resorts to exchange 40 percent of their foreign currency earnings, vowing to continue the campaign until President Dr. Mohamed Muizzu resigns.

The resolution, approved during an emergency meeting of the MDP National Council on Monday night, states that the party’s campaign will continue until the President steps down from office.

The MDP said it believes the current administration’s fiscal and economic policies will have adverse consequences for the country. In particular, the party argued that the mandatory exchange of 40 percent of resorts’ foreign currency earnings would negatively affect the economy. The resolution noted that resorts already contribute approximately 60 percent of their revenue in taxes and require foreign currency to service debts and cover maintenance costs. As a result, the party contended that the measure would not necessarily increase the overall flow of foreign currency into the domestic economy.

According to MDP, the country is moving towards bankruptcy while investor confidence continues to decline. As such, the party's National Council unanimously called on President Muizzu to engage in dialogue to address the country’s financial and economic challenges and urged the government to withdraw the 40 percent foreign currency exchange requirement. It warned that failure to do so would prompt the party to launch direct political action.

President Dr. Mohamed Muizzu, on Monday, ratified amendments to the Foreign Exchange Act that criminalize the publication of black market exchange rates and require resorts to exchange 40 percent of their foreign currency earnings through the banking system.

Following the ratification, the President defended the amendments, stating that although 40 percent of foreign currency revenue must be exchanged with the Maldives Monetary Authority (MMA), resorts should continue paying employees’ salaries in US dollars.

The President noted that while the tourism industry generated USD 5.6 billion last year, only USD 3.8 billion entered the domestic banking system, with just 21 percent of that amount being exchanged. He said the new legal requirements would increase the availability of foreign currency, supporting essential imports and making it easier for businesses to conduct telegraphic transfers (TTs) for basic commodities. Addressing concerns raised by resort owners, the President said the measures were introduced following extensive research and statistical analysis conducted by the MMA, the Finance Ministry and Economic Ministry.