Dollar Conversion Policy Will Benefit the Public Despite Some Discontent, Says VP Latheef 

Vice President Hussain Mohamed Latheef has defended the government’s mandatory foreign currency conversion policy, saying the measure is aimed at benefiting the public despite potentially reducing the personal gains of some individuals.

Speaking on MMTV’s Congress Foari programme, Latheef said President Dr Mohamed Muizzu’s administration was structured around taking actions that benefit the public and addressing the shortage and limited circulation of US dollars in the domestic economy.

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Latheef made the remarks after Parliament approved amendments to the Foreign Exchange Act on Wednesday requiring resorts to exchange 40 per cent of their foreign currency earnings through local banks. The policy has drawn criticism from tourism industry stakeholders over concerns about the impact of the measure amid the country’s ongoing dollar shortage, as well as from resort workers over plans to convert their US dollar salaries and service charges into Maldivian rufiyaa.

He said the policy was a “robust and visionary” decision intended to resolve the country’s dollar shortage, while acknowledging that some people could be unhappy because their personal financial gains may be reduced as a result.

Latheef also claimed that requiring foreign currency earners to convert part of their earnings through local banks had been considered by previous administrations, including the former MDP government, but was not implemented.

He argued that Muizzu had shown the political will to proceed with the policy because he would not back down from decisions he believes are necessary in the public interest.

The government initially proposed making the existing 20 per cent foreign currency conversion requirement mandatory by removing an alternative arrangement that allowed resorts to exchange either 20 per cent of their earnings or USD 500 per tourist. Economic Minister Mohamed Saeed later said the government was considering increasing the requirement to 40 per cent.

The 40 per cent requirement was subsequently introduced through an amendment submitted by Funadhoo MP Mohamed Mamdhooh to a bill originally submitted by Holhudhoo MP Abdul Sattar Mohamed.

The Maldives Association of Tourism Industry (MATI) has opposed the 40 per cent requirement, warning that resorts face substantial US dollar expenses, including fuel, salaries and service charges, taxes, lease payments and foreign loan obligations.

The Tourism Employees Association of Maldives (TEAM) has also launched a campaign against the proposed conversion of resort employees’ salaries and service charges from US dollars to Maldivian rufiyaa. The association said employees from 42 resorts had signed its petition on the first day of the campaign.

The government has maintained that the foreign exchange measures are intended to increase the availability of US dollars in the local market, while its longer-term objective is to shift transactions, including salaries, towards the Maldivian rufiyaa.