The Maldives, facing a severe foreign currency shortage, has introduced new regulations to limit the types of transactions allowed in foreign currency and enforce mandatory exchange controls on tourism establishments and banks.
The Maldivian economy has struggled since a call to boycott the nation by Indian tourists in response to President Mohamed Muizzu’s “India Out” campaign last year. This decline in tourist inflow has exacerbated the country’s financial woes.
Last month, the Maldives narrowly avoided defaulting on an Islamic bond payment after India provided a $50 million interest-free loan. However, the country’s foreign exchange reserves remain insufficient to cover its import costs.
In response, the Maldives Monetary Authority (MMA) implemented a new regulation on October 1, requiring that all foreign currency income generated by the tourism industry be deposited in local banks. This move follows a previous dollar limit imposed in August to tackle the ongoing currency shortage. The updated regulation was published in the local Dhivehi language.
According to the Foreign Currency Regulation (Regulation No: 2024/R-91), all transactions within the Maldives must be conducted in Maldivian Rufiyaa (MVR), with exceptions for specific foreign currency transactions. Payments for goods, services, fees, rents, and wages must now be made in local currency, with invoicing in foreign currency prohibited unless explicitly allowed.
Exemptions to the regulation include payments for exports, international transactions, and remittance services, as well as those legally required to be settled in US dollars. Additionally, all sales proceeds from tourist resorts and guesthouses must be deposited into foreign currency accounts at licensed Maldivian banks.
Moreover, every tourist resort, vessel, or establishment operator is required to exchange a minimum of USD 500 to MVR per tourist through a licensed bank in the Maldives. These exchanged funds can then be used for operational purposes by the tourism operators.
