Committee sets one-day deadline to finish work on USD exchange requirement bill

The Parliament’s Public Accounts Committee has set a one-day deadline to wrap up its review of a government bill to amend the Foreign Currency Act in order to drop the option for resorts to exchange USD 500 per tourist, making it mandatory for all resorts to exchange 20 percent of their monthly revenue with a local bank.

The Foreign Currency Act that took effect in 2025 requires ‘Category-A’ establishments – classified as resorts, integrated tourist resorts and private islands - to exchange USD 500 per tourist or 20 percent of the monthly revenue in US dollars at a Maldivian bank.

The new bill, sponsored by Holhudhoo MP Abdul Sattar Mohamed, seeks to drop the USD 500 option, requiring all such establishments to exchange 20 percent of the monthly revenue.

The bill also proposes greater concessions to ‘Category C’ establishments – non-tourism businesses that earn revenue in US dollars - by raising the revenue threshold from the current USD 15 million in annual USD revenue to USD 25 million.

With the change, non-tourism local businesses that generate an annual revenue of USD 25 million or higher will be required to exchange seven percent of their monthly revenue at a local bank.

The bill was admitted into the Parliament with a unanimous vote of 57 on Wednesday, a day after the central bank announced the proposed changes, and sent to the Public Accounts Committee for review.

During a committee meeting on Wednesday, Funadhoo MP Mohamed Mamdhooh, a lawmaker from the ruling People’s National Congress (PNC), presented a motion to provide until 11:30 am Thursday for submission of any complaints or opinions on the bill, and wrap up the committee’s review by the end of the day.

The motion passed with the unanimous consensus of the committee members in attendance.

Abdul Sattar’s bill is set to take effect in September.

A spokesperson from the Maldives Monetary Authority said on Tuesday that they have no immediate plans to amend the USD exchange requirement for ‘Category B’ establishments - tourist vessels, guesthouses and hotels - meaning that such facilities will continue to have the option of exchanging either USD 25 per head or 20 percent of monthly revenue.

The central bank described the proposed changes as a significant move that will boost US dollars in the country’s banking system, estimating that it will increase the USD going into banks by around USD 100 million per annum.

Demand for dollars from the black market has skyrocketed due to the scarcity of foreign currency within the formal banking system for imports, coupled with the foreign currency required to meet Maldives’ staggering external debt obligations.

The rising value of the dollar poses huge challenges for importers, driving up prices of goods in the Maldivian market.

The proposed changes come as the USD exchange rate in the black market rose to a record high of MVR 22 this week.

Hower, the government has said that the surge is mainly driven by speculation.