President: Changes will boost USD in banking system beyond previous estimates

President Dr. Mohamed Muizzu said on Wednesday that the changes proposed in the Foreign Currency Bill will increase US dollars in the Maldives’ banking system beyond previous estimates.

The foreign exchange regulation that took effect on October 1 requires tourist establishments to exchange a fixed amount of USD per tourist in local banks. Resorts are required to exchange USD 500 per tourist.

But tourism stakeholders argue that the fixed USD exchange requirement, regardless of room rate, duration of stay, the age of guests or special offers, is unfair to tourism establishments with varied market segments.

It also disregards the fact that many of the expenses are paid in USD.

But despite the criticism, President Dr. Mohamed Muizzu announced in a function on November 17 that he will not change the regulation, and that resorts will need to surrender USD 500 per tourist.

On Tuesday, the Maldives Monetary Authority (MMA) announced the formulation of a Foreign Currency Bill. This draft bill, which has been shared with tourist establishments for comment, maintains the USD 500 requirement for resorts, but also offers certain concessions in foreign currency exchange.

In a post on X on Wednesday afternoon, President Muizzu thanked the central bank for maintaining the USD 500 requirement.

“And as I said on November 17, 2014, the formulation of a Foreign Currency Act at the initiation of the MMA is crucial to strengthening the enforcement of the regulation. With this law, resorts will exchange USD 500 per tourist,” he said.

The draft bill also requires non-tourism business that generate over USD 20 million in annual revenue to exchange 20 percent of its revenue.

President Muizzu said that the mandatory exchange of USD by non-tourism establishments that generate USD revenue will increase the USD in the Maldivian banking system beyond previous estimates.

“These conducive changes will provide ordinary citizens and small and medium enterprises with access to more dollars,” he said.

According to President Muizzu, the bill will also lead to other favorable changes.

• A mechanism will be established in July 2025 where state-owned enterprises can access USD at the official rate without needing to go to parallel markets.
• The USD 500 that outbound Maldivian travelers can access will be doubled to USD 1,000 in Q1 2026.
• Credit card limits will be increased in Q1 2026
• The USD limit allowed by banks to Maldivian business operators to make TTs for imports will be increased in July 2025.

500 ޑޮލަރު މާރު ކުރަންޖެހޭ ގޮތަށް ބޭރު ފައިސާއާއި ބެހޭ ބިލުގައި އޮތުމަކީ ވަރަށް ރަނގަޅު ކަމެއް. އެކަމަށްޓަކައި އެމްއެމްއޭއަށް ޝުކުރުދަންނަވަން. އަދި 17 ނޮވެމްބަރ 2024 ގައި އަޅުގަނޑު ދެންނެވި ފަދައިން ގަވައިދު ތަންފީޒުކުރުން ވަރުގަދަ ކުރުމަށްޓަކައި އެމްއެމްއޭ އިން އިސްނަގައިގެން…

— Dr Mohamed Muizzu (@MMuizzu) November 27, 2024

MMA said that the draft bill is an improvement upon certain aspects of the existing foreign exchange regulation.

The regulation currently subjects businesses that fail to comply with the USD deposit requirement with a fine of MVR 5,0000 to MVR 1 million. It also allows the MMA the discretion to impose a daily penalty of MVR 5,000 until the business complies.

But the draft bill stipulates that business that fail to comply will be fined by 0.05 percent of the monthly USD deposit requirement. It also allows the MMA the discretion to impose a daily penalty that does not exceed 0.05 percent of the monthly USD deposit requirement of that business until it complies.

Meanwhile, businesses that fail to comply with the USD exchange requirement will be subject to a fine of 0.1 percent of the businesses’ monthly USD exchange requirement. MMA will also have the discretion to impose a daily penalty that does not exceed 0.1 percent of the monthly USD exchange requirement of that business until it complies.

The MMA said that it has shared the draft bill with tourist establishments, and will open it for public comment next week.