Forex bill referred back to committee for further review

Parliament on Tuesday referred a proposed amendment to the Foreign Exchange Act back to the Public Accounts Committee for further review, delaying its passage despite the committee having previously approved the bill without changes.

The bill seeks to remove the option allowing resorts to exchange a fixed amount of US$500 per tourist and instead require all resorts to exchange 20 per cent of their monthly foreign currency revenue.

The legislation was introduced last Wednesday by Holhudhoo MP Abdul Sattar Mohamed on behalf of the government and was subsequently referred to the Public Accounts Committee.

On Sunday, the committee approved the bill in its original form and submitted its report to parliament.

During Tuesday's sitting, however, PNC Parliamentary Group Leader and Inguraidhoo MP Ibrahim Falah proposed that the bill be sent back to the committee for further consideration.

Falah told parliament that while the bill contained important provisions, further work was needed to finalise the legislation.

He also raised concerns regarding foreign exchange transactions outside the banking system and compliance with existing foreign exchange requirements.

According to Falah, all resorts should comply with obligations established under the law and authorities should take action against entities that fail to do so.

Parliament subsequently voted on the motion to recommit the bill to committee.

The motion passed with 58 votes in favour. No members voted against the proposal, while two members of the opposition Maldivian Democratic Party (MDP) abstained.

Under the Foreign Exchange Act currently in force, Category A tourism establishments, which include resorts, can meet foreign exchange obligations through one of two options.

Resorts may either exchange US$500 per tourist based on monthly arrivals or exchange 20 per cent of their monthly revenue in foreign currency.

The proposed amendment would remove the per-tourist option and require all resorts to exchange 20 per cent of their monthly revenue.

The change is expected to increase foreign currency conversions by resorts that currently use the fixed-rate option.

The bill does not propose any changes for Category B tourism establishments, including safari vessels, hotels and guesthouses.

Those businesses will continue to have the option of exchanging either US$25 per tourist or 20 per cent of their monthly revenue.

The Foreign Exchange Act was enacted in late 2024 and implemented in January 2025 as part of efforts to increase the availability of foreign currency for debt servicing and other external obligations.

The proposed amendment is scheduled to take effect on the first day of next month.

Parliament has extended its current sitting period into next week, and the bill is expected to return to the floor following further committee review.

The legislation is being considered amid continued pressure on foreign exchange availability and a series of government proposals aimed at increasing state revenue.