Recently, the Maldives Monetary Authority (MMA) introduced new rules on foreign currency and money exchange. These changes aim to improve how foreign currency flows through the Maldivian banking system. As a result, the tourism sector, a key driver of the economy, will be significantly affected.

1. The New Currency Regulations by the Maldives Monetary Authority

The new regulations require tourism businesses to convert part of their foreign currency earnings into Maldivian Rufiyaa (MVR) and deposit them into local banks. Specifically, luxury resorts and large hotels must convert 500 USD per tourist, while hotels and guesthouses with fewer than 50 rooms need to convert 25 USD per guest. Moreover, these deposits must be made within 87 days of the month when the earnings were generated. The rules went into effect on October 1, 2024, and businesses now have 30 days to register with the MMA ​(corporatemaldives.com) ​(Atoll Times).

2. Impacts on the Tourism Sector and Other Industries

Tourism generates billions of dollars annually for the Maldives. However, only a small portion of this revenue enters the banking system. The new rules, therefore, aim to increase dollar liquidity in banks. This will allow businesses easier access to loans and help stabilize the financial system. Nevertheless, many tourism operators have expressed concerns. They fear higher operational costs and potential cash flow issues​ (MFR)​ (corporatemaldives.com).

3. Reactions from Maldivian Stakeholders

Despite assurances from the MMA, the Maldives Association of Tourism Industry (MATI) expressed dissatisfaction. According to MATI, their concerns were overlooked during discussions. As a result, they believe the new regulations could financially strain businesses. Many stakeholders are worried about the mandatory currency conversion and its potential effects ​(Adhadhu).

4. MATI’s Concerns and Recommendations

Following the release of the new regulations, MATI met with the Minister of Tourism to discuss their objections. They argue that forcing businesses to convert large portions of their foreign currency earnings into Maldivian Rufiyaa may harm the competitiveness of resorts and hotels, especially during global economic difficulties. Therefore, MATI continues to push for a more flexible approach that minimizes negative impacts​ (Adhadhu)​ (ras.mv).

5. Conclusion

The MMA’s new currency regulations represent an effort to modernize the Maldivian financial system. However, the tourism industry’s reactions show the need for further dialogue between the government and stakeholders. Moving forward, businesses will need to adapt while striving to maintain their competitiveness in the global tourism market.

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