Maldives tourism foreign exchange regulation dispute

The Maldives Parliament passed a regulation requiring resorts to convert 40% of their US dollar revenue into local currency. The legislation also includes measures to restrict the publication of black market exchange rates. President Mohamed Muizzu and PNC Parliamentary Group leader Ibrahim Falah defended the reforms, stating they are based on research and consultation. The policy has faced intense opposition from industry representatives and political figures. The Maldives Association of Tourism Industry (MATI) warned that the mandate is a burden the industry cannot sustain, noting that conversion rates exceeding 10% of total revenue would not be viable. Former President Abdulla Yameen has urged resort operators to defy the law, arguing that the mandate creates hardships for businesses that require foreign exchange for international logistics and servicing foreign loans. In response, ruling party members have accused Yameen of inciting illegal acts and working with the opposition to undermine the administration. Following the implementation of the regulations on September 1, the government denied allegations that it failed to consult the tourism sector. The President’s Office disputed claims that the industry was surprised by the changes, asserting that MATI participated in discussions with senior officials, including a meeting on August 23. Under the new rules, Category A tourism establishments must exchange 40 percent of monthly gross sales through official banking systems, while Category B establishments must exchange either USD 25 per tourist arrival or 20 percent of monthly gross sales. Chief Government Spokesperson Mohamed Hussain Shareef stated the policy aims to address US dollar shortages and alleged that several businesses have recently routed approximately USD 79 million into the parallel foreign exchange market.