Resort operators accused of keeping dollar rate high at President’s Office meeting

Board members of the Maldives Association of Tourism Industry (MATI) were summoned to the President’s Office on Sunday, where government officials raised allegations that resort operators were taking steps to keep the price of US dollars high.

MATI representatives rejected the allegations and maintained that resorts were not involved in manipulating the foreign exchange market.

The meeting comes as the black market exchange rate for the US dollar has risen above MVR 22, compared with the official bank rate of MVR 15.42.

Among the government officials who attended the meeting were Finance Minister Hassan Zareer, Maldives Monetary Authority (MMA) Governor Ahmed Munawar, Bank of Maldives (BML) Chairman and Cabinet Secretary Ahmed Ali Habeeb, and Homeland Security Minister Ali Ihusaan.

During the meeting, officials alleged that actions were being taken to restrict the supply of dollars and maintain exchange rates at higher levels.

MATI representatives denied the claims, saying resort operators were not engaged in such practices.

The meeting took place as the government moves to increase the amount of foreign currency tourism businesses are required to exchange through the banking system.

Under the existing foreign exchange framework, resorts classified as Category A tourism establishments can meet their obligations by exchanging either USD 500 per tourist based on monthly arrivals or 20 per cent of their monthly foreign currency revenue.

The government has submitted an amendment to Parliament seeking to remove the USD 500-per-tourist option. If passed, resorts would be required to exchange 20 per cent of their monthly foreign currency revenue.

The amendment has been recommitted to Parliament’s Public Accounts Committee for further review.

According to foreign exchange compliance data released by the MMA, 78 per cent of resorts are meeting their dollar exchange requirements.

The central bank said 20 per cent are not exchanging dollars at the required level, while two resorts have failed to exchange any dollars.

The MMA has identified the two resorts as Rahaa Resort in Laamu Atoll and South Palm Resort in Addu.

Under the Foreign Exchange Act, 90 per cent of the dollars exchanged by resorts are taken by the MMA. Of this amount, 30 per cent is released back to commercial banks.

According to the MMA, the foreign currency returned to banks is intended to support specified requirements, including financing imports of food and other public needs and providing foreign currency to small and medium-sized enterprises.

The remaining foreign currency retained by the central bank is also used to meet import requirements for products including fuel, cooking gas and medicines.

The government has introduced a series of measures in recent weeks as the gap between the official and parallel-market exchange rates has widened. The official US dollar rate remains at MVR 15.42, while the parallel-market rate has exceeded MVR 22.