Governor of Maldives Monetary Authority (MMA) Ahmed Munawwar has underscored the crucial significance of the newly introduced Foreign Currency Regulation in enhancing the operations of the banking system. He made the statement in a panel discussion held in the Maldives National University (MNU). The panel discussion was organised by MMA.
During the discussion, senior officials from MMA provided information on the new Foreign Currency Regulation and the Money Exchange Regulation. MMA's Governor Munawwar noted that while USD 4.5 billion flows into the Maldives each year, the central bank receives only 23% of this amount through taxes and other sources. He indicated that the overall demand for the Maldivian currency, Rufiyaa (MVR), could be augmented by reducing the quantity of dollars that do not enter the banking system. He explained that this was one of the reasons for the new regulations being introduced.
Although these regulations have been approved and welcomed by businesses, Munawwar mentioned that many have sought clarification on the procedures for depositing and exchanging funds in banks. In response, the governor revealed that local banks are not capable of issuing dollars sufficient to meet the demands of the tourism sector and must resort to borrowing from foreign banks to fulfil these needs.
Furthermore, Governor Munawwar disclosed that while USD 4.5 billion enters the Maldives annually, USD 2 million has been collected in the banking industry of the Maldives. He expressed optimism about improving banking operations if a greater volume of foreign currency were to enter the system.
According to the new Foreign Currency Regulations issued by MMA, all tourism facilities registered in the Maldives Inland Revenue Authority (MIRA), are mandated to regulate their incomes via the national banks. Additionally, resorts and safaris are required to exchange USD 500 per head, through local banks, while guest houses are required to exchange USD 25 per guest.
While MMA has imposed these regulations, it has given a three-month grace period for businesses, aiming to not burden businesses.