President Dr Mohamed Muizzu has defended the government’s decision to require Category A tourism establishments to convert 40 percent of their monthly foreign currency revenue, saying studies conducted before the change showed the requirement can be met without disrupting resort operations.
Speaking after ratifying amendments to the Foreign Currency Act, the President said the revised requirement was introduced following detailed analysis of financial data and research involving technical and academic experts.
Under the previous framework, tourism establishments had the option of converting either USD 500 per tourist arrival or 20 percent of monthly gross sales. The newly ratified amendment changes the requirement for Category A establishments to 40 percent of monthly gross sales, removing the per-tourist option for the category.
President Muizzu said the government had examined resort finances and concluded that the higher conversion requirement would remain manageable after businesses meet major operating commitments.
“The data shows this is not something that will burden any resort,” the President said, explaining that resorts would be able to meet obligations such as loans, salaries and operational expenses while complying with the 40 percent requirement.
He urged tourism businesses to cooperate with the policy as a national responsibility, arguing that bringing more foreign currency into the formal banking system would ultimately benefit the wider public.
According to the President, one of the government’s priorities is to improve access to foreign currency for essential imports.
He said dollars entering the banking system under the revised arrangement could be used to process telegraphic transfers, commonly known as TTs, for businesses importing essential goods into the Maldives.
The President also pointed to figures from the tourism industry to explain the rationale behind the amendment.
According to figures cited by Muizzu, the tourism sector generated approximately USD 5.6 billion last year, of which around USD 3.8 billion entered the Maldivian banking system.
However, he said only 21 percent of the USD 3.8 billion was converted through banks, while the overall level of foreign currency conversion prior to the introduction of the law stood at around 10 percent.
Muizzu said the changes were therefore intended to increase the amount of foreign currency available through official channels and improve the government’s ability to meet public and economic needs rather than place additional pressure on tourism businesses.
The Maldives earns the majority of its foreign currency through tourism, while the economy simultaneously requires substantial amounts of US dollars to pay for imported food, fuel, medicine, construction materials and other goods.
The gap between foreign currency generated by the economy and the amount available through banks has contributed to persistent demand for dollars outside official channels, where exchange rates have historically been higher than official banking rates.
The latest amendment to the Foreign Currency Act forms part of the government’s efforts to increase the flow of foreign currency through licensed banks and strengthen regulation of the foreign exchange market.
In addition to the 40 percent requirement for Category A tourism establishments, the amended law requires Category B establishments to convert either USD 25 per tourist arrival or 20 percent of monthly gross sales.
The amendment also raises the mandatory conversion threshold for non-tourism businesses earning foreign currency from USD 15 million to USD 25 million annually. Businesses exceeding the new threshold will generally be required to convert 40 percent of monthly gross sales, while wholly Maldivian-owned businesses will be subject to a seven percent requirement.
The revised rules are scheduled to come into force on September 1, 2026.
President Muizzu maintained that the central objective of the changes is to ensure more of the foreign currency generated within the Maldivian economy becomes available through the domestic banking system, particularly to meet essential needs of businesses and the public.
