President Ibrahim Mohamed Solih on Wednesday expressed confidence in lowering the exchange rate below MVR 15.42 if 30 percent of US dollar income could be retained in the Maldives.
At a campaign event in Addu for Saturday’s presidential election, Solih explained the government’s efforts to alleviate the dollar shortage, noting two options that his administration tried to implement during the current term.
One option was de-dollarization of the domestic economy or requiring all local transactions to be conducted in Dhivehi Rufiyaa. If the change is enforced, businesses that earn dollar revenue would be forced to convert to local currency and banks would have enough for the public's needs, the president said.
“Everything bought [from shops] and salaries as well must be paid in [Rufiyaa]. Tax as well will have to be paid in Rufiyaa. Everything. If that is the case, those dollars will have to be changed with the government, with banks, in line with rules determined by MMA [Maldives Monetary Authority]. If so we will be able to hold enough dollars for the public to get as much as they need from banks,” Solih said.
The second option considered for resolving the dollar shortage was requiring businesses to keep a portion of their dollar income in the country’s banks for a certain period. The government discussed keeping 30 percent with businesses, the president said. An agreement was nearly reached, he added.
But this could only be done by the government providing legal assurances that businesses would be able to access their funds when needed, Solih said, adding that the government was working towards that end.
“There are foreign investors in the Maldives. [They need] the certainty that they will be able to get it when they need to take it out of the country. And Maldivian investors have taken loans from abroad. The government needs to provide legal certainty that they will be able to repay the loan. We’re carrying out that work,” he said.
The president said he would implement one of the two policies if re-elected to a second term, which would alleviate the dollar shortage.
The official exchange rate in the Maldives is MVR 15.42 per USD 1 but the price of dollars is always above MVR 16 in the black market.
