The Maldives Monetary Authority (MMA) has presented a comprehensive package of proposed amendments to the Foreign Currency Act to the Attorney General’s Office, outlining a broader regulatory framework aimed at strengthening foreign exchange liquidity, increasing the circulation of foreign currency through the domestic banking system and supporting the Government’s long-term efforts to reinforce monetary and financial stability.
The proposed amendments introduce significant revisions to the foreign currency conversion requirements applicable to businesses earning foreign currency, with particular attention given to the Maldives’ internationally renowned resort tourism industry. Tourism remains the country’s principal foreign currency-generating sector, supported by a diverse portfolio of luxury resorts, hotels, guesthouses, safari vessels and other tourism establishments serving travellers from around the world. The proposed framework seeks to ensure that a greater proportion of the foreign currency generated through this internationally competitive industry enters the domestic banking system and contributes more directly to national foreign exchange liquidity.
One of the principal changes concerns Category A tourism establishments, which primarily include tourist resorts. Under the existing framework, resort operators are permitted to choose between converting USD 500 for each tourist staying at the property or converting 20 percent of their total monthly foreign currency gross sales. The proposed amendments would remove the USD 500 per-tourist conversion option and require all Category A resorts to convert 20 percent of their monthly foreign currency gross sales through the domestic banking system.
The proposed adjustment is particularly significant for the Maldives’ higher-end resort segment, where properties can generate substantial foreign currency earnings through accommodation and a wide range of premium tourism services. The country has developed one of the world’s most distinctive resort tourism models, with internationally recognised hospitality brands operating alongside Maldivian-owned properties across numerous atolls. Many high-end resorts command room rates considerably above those of conventional tourism establishments, meaning that their foreign currency earnings per visitor can be significantly higher than the amount reflected under a fixed per-tourist conversion mechanism.
According to the proposal, the existing alternative conversion arrangement has resulted in differences in the proportion of foreign currency earnings converted by resorts operating at different market levels. Luxury resorts generating considerably higher revenue per guest have generally been able to meet their statutory obligations through the fixed USD 500 per-tourist calculation rather than converting 20 percent of their actual monthly foreign currency earnings. Establishing a uniform percentage-based requirement is therefore intended to create a more consistent relationship between the foreign exchange contribution of a resort and the revenue it generates.
The MMA estimates that replacing the per-tourist calculation for Category A establishments with a mandatory 20 percent conversion of monthly foreign currency gross sales could bring approximately USD 100 million in additional foreign currency into local commercial banks annually. The additional liquidity is expected to strengthen the availability of foreign currency within the formal banking system and support the broader objectives of the Government and monetary authorities in improving access to foreign exchange across the economy.
The proposed framework also recognises the varying business models within the tourism sector. Category B establishments, which include tourist guesthouses, hotels and tourist vessels, will continue to have the existing option of converting either USD 25 for every tourist arrival or 20 percent of monthly foreign currency gross sales. Maintaining a separate mechanism for these operators reflects the differences in scale, revenue structures and operating models between smaller tourism businesses and the country’s resort sector.
Foreign currency conversion requirements for Category C businesses, comprising qualifying non-tourism enterprises earning foreign currency, will continue to be set at 20 percent of monthly foreign currency gross sales. However, the threshold determining which non-tourism businesses fall within the mandatory conversion framework is proposed to increase substantially. Under the amendments, the minimum annual foreign currency revenue threshold would rise from USD 15 million to USD 25 million, or its equivalent in another foreign currency, based on earnings during the preceding calendar year.
The higher threshold is expected to focus the mandatory conversion framework on larger commercial enterprises while providing greater regulatory flexibility for businesses operating below that level. The proposed amendments would also provide the MMA with explicit authority to reduce the required conversion percentage depending on factors including the sector in which a business operates and its ownership structure. This could allow differentiated treatment for certain enterprises, including the possibility of lower conversion requirements for businesses that are wholly Maldivian-owned.
The detailed conditions and eligibility criteria governing such adjustments are expected to be prescribed under the General Regulation on Foreign Currency, Regulation No. 2026/R-28. The arrangement would provide the central bank with greater flexibility to implement foreign exchange requirements in a manner that takes account of different sectors and business structures while maintaining the overall objectives of the national foreign currency framework.
The proposed amendments also introduce measures intended to strengthen transparency and ensure that foreign currency generated in the Maldives is channelled through the domestic financial system. Businesses subject to the Foreign Currency Act would be required to designate a specific foreign currency account maintained with a local commercial bank and formally notify the MMA of that account. All foreign currency sales proceeds covered by the legislation would then be required to be deposited into the designated account.
Changes are also proposed to the National Payment Systems Act, Law No. 8/2021, to strengthen the integration of resort transactions with the domestic banking infrastructure. Under the proposed framework, tourist resorts would be required to operate Point of Sale terminals connected directly to accounts maintained with local banks. This would ensure that card payments received from resort guests are processed through the Maldivian banking network, improving the visibility of tourism-related financial flows and increasing the participation of domestic financial institutions in transactions generated by the country’s largest foreign exchange-earning industry.
The proposed requirements are expected to further integrate the resort sector with the national payment ecosystem while supporting the development of a more transparent and resilient financial system. With millions of international visitors travelling to the Maldives and resorts conducting substantial volumes of transactions in foreign currency, greater use of domestic banking channels could strengthen financial data, improve regulatory oversight and contribute to the availability of foreign exchange within the country.
Businesses regulated under the legislation would additionally face expanded reporting requirements. These would include mandatory disclosure of information relating to foreign debt, providing the MMA with a more comprehensive view of external financial obligations across regulated enterprises. Enhanced reporting is expected to strengthen the central bank’s capacity to assess foreign currency exposures and administer the Foreign Currency Act effectively.
While strengthening regulatory requirements, the proposed amendments also incorporate mechanisms intended to provide businesses with administrative flexibility where necessary. A general provision would authorise the MMA to grant concessions and flexible compliance arrangements to commercial entities, including the possibility of allowing outstanding foreign currency conversion obligations to be settled through instalment arrangements.
The proposed flexibility would also extend retrospectively to eligible requests for concessions submitted before the amendments enter into force. This approach is intended to support orderly compliance while enabling the regulator to take account of the circumstances of individual businesses within the wider foreign exchange framework.
The legislative package is proposed to take effect one month after its publication in the Government Gazette, providing a transition period for affected businesses and financial institutions to prepare for the revised requirements.
Beyond the immediate legislative amendments, the MMA has outlined a broader medium-term policy direction aimed at strengthening the role of the Maldivian Rufiyaa in domestic economic activity. The central bank has emphasised that wider use of the national currency for transactions conducted within the Maldives is important for improving the transmission of monetary policy and strengthening the long-term stability and effectiveness of the domestic foreign exchange market.
As part of this policy direction, the MMA plans to explore measures that could require Government taxes to be paid in Maldivian Rufiyaa, progressively review and rationalise existing foreign exchange exemptions, and consider increasing foreign currency conversion percentages across different sectors over time. The policy roadmap also includes examining restrictions on domestic transactions conducted through foreign currency accounts and reviewing the regulatory framework governing money-changing businesses.
These measures form part of a broader effort to strengthen the domestic currency’s role within the national economy while ensuring that foreign currency generated through tourism, international commerce and other activities circulates more effectively through regulated financial channels. For an economy where tourism generates a significant share of foreign exchange receipts, greater integration between resort revenue, commercial banking and the domestic payment system is expected to support improved foreign currency availability and reinforce financial sector resilience.
The MMA has further indicated that, as the Maldives’ Gross International Reserves strengthen over time, the country may consider the possibility of transitioning towards a more flexible exchange rate regime. Any such development would form part of a longer-term monetary policy strategy and would be considered alongside improvements in reserve adequacy, domestic currency usage and foreign exchange market conditions.
The proposed reforms reflect the Government’s continuing focus on strengthening economic management, improving the circulation of foreign exchange through the formal financial system and developing a regulatory environment capable of supporting the Maldives’ growing and increasingly sophisticated economy. By aligning foreign currency conversion obligations more closely with actual business revenues, strengthening domestic payment infrastructure and providing the MMA with greater supervisory flexibility, the proposed framework is intended to support sustainable foreign exchange management while preserving the competitiveness and continued growth of the Maldives’ globally recognised tourism industry.
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