Governor of the Maldives Monetary Authority (MMA) Ahmed Munawwar has said that the tourism sector currently contributes only 3% of the foreign currency to the banking system, however, the new regulations will increase the flow of US dollars into the banking system and boost the demand for the Maldivian Rufiyaa (MVR). He made the remarks during an interview with PSM News, discussing two new regulations introduced by the MMA to enhance foreign exchange circulation.
Speaking to PSM News, Governor Munawwar pointed out that recent MMA data shows a sharp decline in foreign exchange entering the banking system following the COVID-19 pandemic. He said that the reduction has led to a significant foreign currency shortage in the banking sector. He said that the statistics revealed that while dollar inflows have dropped, the amount of foreign currency deposited in banks has also fallen substantially. He said that USD 152.5 million was deposited in 2019, but it had dropped to just USD 68 million by 2023, accounting for only 3% of the dollars generated by the tourism sector. He also noted that the new MMA regulations are expected to increase this figure.
Additionally, Governor Munawwar said that that the changes are projected to increase the tourism sector’s contribution to 10% or 15%. He highlighted that both the Bank of Maldives (BML) and other banks stand to benefit from the new measures. Under the updated regulations aimed at resolving the foreign exchange shortfall, he said that banks in the Maldives are required to allocate dollars for every tourist visiting the country. He also said that resorts will need to deposit USD 500 per tourist arrival, while guesthouses in the islands must deposit USD 25 per arrival.
Furthermore, Governor Munawwar said that the new policies will alleviate current challenges in accessing foreign currency, enabling banks to better meet foreign exchange demands. He said that the MMA currently intervenes with USD 300 to 400 million annually in foreign exchange support. He, however, said that the central bank expects the figure to double with the new measures, allowing individuals to more easily access the dollars they need through the banks.
Moreover, Governor Munawwar said that the reforms will likely affect limits on remittances, trading, and other financial activities. He also said that banks cannot distribute funds they do not have access to.