President says forex measures based on research, consultation

President Dr Mohamed Muizzu on Wednesday defended the government’s measures to address the foreign currency shortage, saying the policies were introduced after research, consultation and assessment and would produce results.

Speaking on state broadcaster PSM’s Nation Chat programme, President Muizzu responded to criticism of measures introduced by the government in recent days, including changes to foreign currency conversion requirements for resorts.

Parliament on Wednesday passed amendments to the Foreign Exchange Act requiring resorts to convert 40% of their monthly foreign currency revenue through local banks, up from the 20% proposed when the legislation was first submitted.

Other measures passed by Parliament include penalties for selling foreign currency above rates set by the Maldives Monetary Authority (MMA) and restrictions on publishing and promoting exchange rates outside those set by the central bank.

The government has also introduced changes to taxation involving foreign currency transactions, while the MMA has outlined plans to move domestic transactions towards the Maldivian Rufiyaa by 2030. Regulations have also been amended to require expatriate workers to receive salaries through accounts at banks operating in the Maldives.

Responding to a question on the policies, President Muizzu said political figures had expressed different views but maintained that the measures were required to address the foreign exchange situation.

“As you mentioned, various political figures are saying different things. But overall, God willing, the general public recognises that to improve our economic situation — especially to resolve the foreign exchange issue — these measures we are taking are necessary steps,” he said.

President Muizzu rejected suggestions that the changes had been introduced without assessment, saying government teams had conducted consultations and technical work before decisions were made.

“We are proceeding after consulting with everyone involved. The steps we take — whether enacting a law or amending an existing one — are entirely fact-based,” he said.

“We don't just act suddenly on a whim. Our teams conduct months and days of consultations, technical evaluations, research, and study how these matters are handled in foreign countries.”

The President said officials involved in formulating the policies had education, technical knowledge and experience in their respective fields.

“These amendments are submitted through a very thorough process. The changes being brought follow the same rigorous review, including the reforms to the foreign exchange rules,” he said.

President Muizzu said his administration would not introduce measures that would hinder the economy and maintained that policies implemented during his presidency were intended to expand economic activity.

“I certainly don't believe any previous administration has introduced and implemented policies to grow or expand the Maldivian economy more than we have,” he said.

“God willing, the steps being taken regarding foreign currency will yield good results. Various parties may make noise for political purposes, but overall, these actions will bring positive outcomes.”

The amendments to the Foreign Exchange Act were initially submitted to Parliament with a proposal to remove the option allowing resorts to convert USD 500 per tourist and replace it with a requirement to exchange 20% of foreign currency revenue.

The bill initially cleared the committee stage on that basis before being recommitted for further amendments.

When the committee completed its second review, the 40% requirement had not been included. The bill was subsequently returned to the parliamentary floor.

During Wednesday’s sitting, the ruling People’s National Congress (PNC) introduced an amendment increasing the requirement to 40%. Parliament passed the bill with 47 votes in favour and 12 against.

The changes have drawn objections from tourism industry organisations, workers’ representatives and opposition parties, which have raised concerns over the effect on resort operations, employees, investment and foreign currency obligations.

Mohamed Khaleel, who served as President Muizzu’s advisor on tourism sector matters, resigned from his post on Wednesday amid disagreement over the government’s foreign exchange policy.