Maldives’ Central Bank, Maldives Monetary Authority (MMA) is expecting tourist resorts to exchange around USD40 million under the new Foreign Currency Law (Forex Law) now in effect.
The new law was designed to mitigate the ongoing foreign currency shortage in the Maldives came into effect from 1 January.
The new law, which mandates tourism facilities to exchange a portion of their foreign earnings through local banks was ratified by President Dr Mohamed Muizzu in December.
The law has introduced a framework for businesses operating under Maldivian law to exchange foreign currency obtained from realised sales proceeds. These businesses are required to exchange their foreign currency with banks operating in the Maldives, which, in turn, must sell a specified percentage of these exchanges to the MMA.
Businesses are mandated to register at the MMA and submit regular sales reports on guests.
An MMA official, on condition of anonymity told PSM News that 138 resorts out of the 175 in operation have submitted the required sales report before they begin exchanging foreign currency through local banks on 28 January.
Based on the sales reports received thus far, the amount of foreign currency that will be exchanged is estimated to be between USD30-40 million, the official said.
The law aims to establish clear guidelines for managing foreign currency transactions in the Maldives and regulate currency exchange practices. The legislation mandates that all domestic transactions must be conducted in Maldivian Rufiyaa, prohibiting the use of foreign currencies except under specific circumstances defined by law.
It also forbids charging Maldivian nationals for any services provided or acquired within the Maldives in any currency other than the Rufiyaa.
Based on their operations and revenue, businesses are categorised into three distinct groups and must exchange foreign currency as follows:
• Category A: Establishments such as resorts, integrated tourist resorts, private island resorts, resort hotels, or any such business that falls under this category must exchange either USD500 per tourist per month or 20 percent of their gross monthly sales with banks.
• Category B: Establishments such as tourist hotels, tourist guest houses, and tourist vessels are required to exchange USD25 per tourist per month or 20 percent of their gross monthly sales with banks.
• Category C: This category includes businesses not falling under Categories A or B but with annual sales or purchase transactions exceeding USD15 million in foreign currency; they must exchange 20 percent of their gross sales with banks.
The Act further requires businesses operating in the tourism sector or those exceeding the USD15 million thresholds in foreign currency transactions annually to register with the MMA and transfer their realised foreign currency sales proceeds to a local bank.