MMA: New regulations will pave way for local banks to provide loans for resorts

Maldives Monetary Authority (MMA)’s Deputy Governor Ahmed Imad states the newly established Regulation on Foreign Currency and the Regulation on Money Changing Business will pave way to facilitate substantial loans required to further develop the tourism sector within the Maldivian banking system.

MMA published two new regulations aimed at increasing the flow of USD in the Maldives last week.

Speaking at this week’s episode of Sun’s ‘Editoruge Suvaal’ (Editor’s Question), Imad underscored that increasing USD or foreign currency flow within the Maldivian banking system will allow local banks to provide more loans.

This is a point of concern for individuals investing in resorts and the tourism sector.

Billions of dollars are incurred for tourism development, especially resorts. Investors are forced to rely on foreign banks for funds, as Maldivian banks lack the capacity to provide loans of such caliber.

The Deputy Governor expressed his belief that the new regulations would address this.

“This means, there will be opportunities for tourism expansion opportunities within our banking system if the flow of foreign currency within our banking system is increased,” he said.

Imad further said the Regulation on Money Changing Business will also see great changes including a positive change to the foreign currency market.

Statistics by Maldives Association of Tourism Industry (MATI) show that Maldives has recorded approximately USD 4 billion in tourism revenue over the past five years. However, the majority of this was deposited to foreign banks with local banks incapable of issuing loans for the tourism sector.

MMA’s new regulations require all tourism revenues to be deposited in the Maldives and impose a mandatory surrender of USD for each tourist.

In this regard, Category A’ tourist establishments - tourist resorts, integrated tourist resorts and resort hotels – to exchange USD from a local bank at the rate of USD 500 per tourist for all monthly arrivals before the 28th day of the third month following each respective month.

Meanwhile, ‘Category B’ tourist establishments – tourist guesthouses and hotels in residential islands with registered rooms of 50 or under - must exchange USD in the same manner, but at the rate of USD 25 per tourist.

Notably, the official exchange rate for USD is MVR 15.42. However, the exchange rate currently stands above MVR 18 due to the shortage of foreign currency.