The Maldivian economy has been under strain following a decline in tourist arrivals, particularly from India, in response to President Mohamed Muizzu’s “India Out” campaign last year. Recently, the country narrowly avoided defaulting on an Islamic bond payment after India extended a USD 50 million interest-free loan.
The Maldives Monetary Authority (MMA) has implemented the Foreign Currency Regulation (Regulation No: 2024/R-91) to address the pressing issue of foreign exchange shortage. Under this regulation, all foreign currency income generated by the tourism industry must be deposited in local banks. The regulation also mandates that all transactions within the Maldives be conducted in Maldivian Rufiyaa (MVR), with specific exceptions for certain international transactions.
According to the new rules, tourism establishments, including resorts, vessels, and guesthouses, are required to exchange a minimum of USD 500 per tourist to MVR through a licensed bank. The proceeds from these exchanges can be used by operators for their operational needs. Non-compliance with the regulation can result in fines ranging from MVR 5,000 to MVR 1,000,000.
Exempted transactions include payments for exports, international transactions, and legally mandated settlements in US dollars. The regulation also specifies that all realized sales proceeds from tourism operators must be deposited into a foreign currency account held at a licensed bank in the Maldives within 87 days of the end of each month.
The Maldives, which recorded 1.8 million tourist arrivals last year, has a debt-to-GDP ratio of approximately 110 percent. According to Fitch Ratings, the country’s total external debt obligations are projected to grow to USD 557 million in 2025 and USD 1 billion by 2026. Moody’s Ratings estimates the total external debt obligations at about USD 600 million to USD 700 million in 2025. The International Monetary Fund (IMF) has also warned of a potential debt crisis.
The new MMA rules require tourism goods and service providers to register with the central bank within 30 days. Any transactions made in foreign currency outside the exempted categories will face fines ranging from MVR 10,000 to MVR 1,000,000.
The MMA anticipates that these regulations will enhance foreign currency exchanges from the tourism sector, which is a critical source of foreign exchange for the island nation.
Source: PTI
