Former Deputy Speaker of Parliament Eva Abdulla has said that even when businesses source their own foreign currency, it now takes up to two weeks for telegraphic transfers (TTs) processed through the Bank of Maldives (BML) to reach suppliers.
Speaking at a panel discussion organised by the opposition Maldivian Democratic Party (MDP) last night, Eva highlighted that the two-week delay in funds reaching suppliers is placing an immense strain on businesses.
"Even after sourcing the dollars themselves and making a TT, business owners are reporting that the funds do not reach the supplier for two weeks. Anyone in business knows that a delay of nearly two weeks is incredibly difficult to sustain," Eva said.
"Consider a business with cargo sitting at the port while the supplier waits two weeks for payment. They have to bear the cost of demurrage for those two weeks. While demurrage accumulates, all other overheads continue—salaries must be paid, utilities settled, and warehouse rents covered."
Eva noted that for businesses making a TT of USD 100,000, only 25 percent is available at the official bank rate. To cover the remaining 75 percent, businesses are forced to spend an additional MVR 400,000 to purchase dollars from the black market.
She further explained that businesses requiring USD 100,000 in monthly TTs would face an additional annual expenditure of nearly MVR 5 million due to the exchange rate gap.
"To secure funds for a USD 100,000 TT, a business owner has to spend roughly MVR 400,000 extra per month. By the end of the year, that totals nearly five million Rufiyaa just for the same TTs. The question is, how many businesses can actually absorb a hit of five million Rufiyaa a year?" Eva asked.
Eva warned that while the rising cost of the dollar is currently causing an economic slowdown, it will have long-term consequences for national development and the economy. She emphasized that the most vulnerable households would ultimately bear the brunt of this impact.
Information obtained by Adhadhu indicates that some businesses have been unable to process TTs through BML for an extended period. Furthermore, even after a TT is initiated, there are delays before the funds are credited to the supplier’s account.
With the black market rate for the dollar now exceeding MVR 21, businesses can only access 25 percent of their TT requirements at the official bank rate. While they are forced to source the remaining 75 percent from the black market, business owners report that even finding dollars through informal channels is becoming increasingly difficult.
