In a significant economic milestone, President Dr. Mohamed Muizzu announced that tourism service providers have converted more than $25 million into local banks under the recently enacted Foreign Currency Act. This achievement underscores the sector’s commitment to bolstering the nation’s financial stability.
The Foreign Currency Act, effective from January 1, 2025, mandates that tourism establishments convert a portion of their foreign currency earnings into Maldivian Rufiyaa (MVR). The Maldives Monetary Authority (MMA) had proactively formulated related regulations starting from October of the previous year, ensuring a seamless transition for businesses.
During a recent visit to Hoarafushi in Haa Alif Atoll, President Muizzu highlighted the widespread compliance among resorts. “Except for very few resorts, all are fully adhering to the new regulation and are converting dollars to banks,” he stated. He emphasized that the government will not grant exemptions to any party required to convert dollars under this regulation, noting that proper implementation will significantly ease economic challenges.
Under the regulation, resorts are obligated to convert $500 per tourist, while guesthouses must convert $25 per tourist to banks. Alternatively, “Category A” resorts have the option to convert either $500 per tourist or 20% of their total monthly revenue in dollars. Similarly, “Category B” guesthouses can choose to convert either $25 per tourist or 20% of their monthly revenue. These measures aim to enhance dollar circulation within the formal banking system, thereby strengthening the nation’s fiscal framework.
The deadline for the first round of dollar conversions expired recently. While the exact amount converted during this period has yet to be disclosed, the MMA estimates that between $30 million and $40 million will be integrated into the banking system through these efforts. This initiative reflects the government’s dedication to fostering economic stability and ensuring the availability of foreign currency for the general public and small and medium-sized enterprises.
The administration’s firm stance on enforcing the Foreign Currency Act demonstrates its commitment to maintaining a robust and resilient economy. By mandating these conversions, the government aims to increase dollar availability, benefiting various sectors and contributing to the overall economic well-being of the Maldives.
