MMA Aims to Shift Financial Transactions to Rufiyaa by 2030

The Maldives Monetary Authority (MMA) aims to introduce reforms that would shift financial transactions in the Maldives towards the use of Maldivian Rufiyaa by 2030, Governor Ahmed Munawar has said.

Speaking at a press conference at the President’s Office today, Munawar said a significant share of financial transactions in the Maldives continues to take place in US dollars.

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He said the MMA’s long-term goal was for the country to conduct financial transactions primarily in Maldivian Rufiyaa, adding that previous central bank governors had also pursued the objective of strengthening the local currency’s role in the economy.

“Salaries are currently being paid in dollars, for instance, if you look at TMA or similarly at resorts. Therefore, changes must also come to this practice of paying salaries in dollars. Only then will the demand for Maldivian Rufiyaa actually increase,” Munawar said.

The Governor also highlighted foreign currency payments made to the government, including land rent from tourism businesses, as an area requiring reform.

According to Munawar, foreign currency currently accounts for more than 40 percent of financial transactions in the Maldives.

He said the changes would require broader macroeconomic reforms and greater stability in fiscal policy.

“Macro-level changes must also be brought. Similarly, stabilisation needs to come to budget policy. Our vision is that the Maldives should operate under something like a managed float. Even when moving to a managed float, the MMA must maintain adequate reserves,” he said.

Further Changes to Foreign Exchange Rules Planned

Munawar also said the MMA plans to propose further amendments to the Foreign Exchange Act, including increasing the mandatory foreign currency conversion requirement for resorts from 20 percent to 40 percent.

He said the proposed amendments would also seek to reduce the frequency of required dollar conversions from once every three months to once a month.

The MMA also plans to introduce a mechanism to monitor how foreign currency earnings are spent, he added.

The proposed changes come after the government recently submitted amendments to the Foreign Exchange Act that would replace the existing requirement for resorts to exchange USD 500 per tourist with a requirement to convert 20 percent of their revenue.

The bill also seeks to ease foreign currency exchange requirements for businesses that are fully Maldivian-owned, excluding tourism businesses and financial institutions, while providing greater flexibility for entities facing difficulties in meeting legally mandated conversion amounts and deadlines.

Under the proposed amendment, the requirement to deposit foreign currency earnings into a bank account would apply to tourism businesses and other entities whose foreign currency sales reached at least USD 25 million during the previous calendar year.

The current threshold applies to entities earning at least USD 15 million in foreign currency revenue.