The Maldives Monetary Authority (MMA) has initiated amendments to the Foreign Exchange Regulations, moving to abolish the current requirement for resorts to exchange USD 500 per tourist. Under the proposed changes, resorts will instead be mandated to exchange 20 percent of their total gross revenue into local currency.
According to the central bank, these legislative changes are being introduced to address the disparity in exchange amounts between high-end luxury resorts and other properties that has persisted under the flat USD 500-per-head rule.
Furthermore, the MMA has revised the eligibility threshold for non-tourism businesses categorized under "Category C." While current regulations require businesses earning over USD 15 million annually to exchange 20 percent of their foreign currency, the MMA now intends to raise this threshold to USD 25 million.
Despite the adjustments targeting resorts in "Category A" and businesses in "Category C," no changes have been proposed for "Category B," which includes guesthouses.
Statistics from the MMA reveal that during the first year of the Foreign Exchange Regulations' implementation, tourism businesses exchanged USD 1.7 billion (MVR 26.2 billion) through commercial banks. From this amount, banks exchanged USD 768.5 million (MVR 11.8 billion) with the central bank.
The MMA stated that the foreign exchange regulations have successfully increased the volume of US dollars circulating within the domestic economy. Records indicate that prior to the implementation of these regulations, the ratio of dollars entering the banking system ranged between 9 and 15 percent of total revenue. This figure rose to 21 percent last year.
