Maldives Imposes New Currency Rules with Strict Penalties for Non-Compliance

The Maldives has enacted new foreign currency regulations designed to strengthen economic stability. These rules impose strict compliance requirements, and failure to adhere to them will result in significant fines. The government aims to enhance currency management and ensure proper handling of foreign exchange transactions. This initiative reflects the country's commitment to maintaining financial order and safeguarding its economy against potential risks.

The Maldives requires that all foreign currency earnings from tourism be deposited in local banks and has limited most transactions to the Maldivian Rufiyaa (MVR). Noncompliance with this regulation may lead to penalties ranging from MVR 5,000 to MVR 1 million.

Facing a critical shortage of foreign currency, the Maldives has implemented a new regulation to enhance oversight of foreign currency transactions, especially in its essential tourism sector. Effective October 1, the Maldives Monetary Authority requires all foreign currency revenue from tourism to be deposited in local banks.

The regulation mandates that most transactions be conducted in the local currency, Maldivian Rufiyaa (MVR), with limited exceptions for specific international transactions and services.

This action follows previous measures by the Maldives Monetary Authority, which in August placed a cap on dollar transactions amid a dollar shortage.

According to the new regulation, most domestic transactions—including payments for goods, services, wages, and rent—must occur in MVR, and invoicing in foreign currency is not allowed.

Exceptions are made for export transactions, remittances, and certain legally required payments in US dollars. Tourism operators, such as resorts and guesthouses, must convert a minimum of $500 per tourist into MVR through licensed banks for their operations.

Noncompliance with the regulation could result in fines ranging from MVR 5,000 to MVR 1 million.

The Maldivian economy has faced further strain due to calls for Indian tourists to boycott the country in response to President Mohamed Muizzu's 'India Out' campaign from last year.

Last month, the Maldives narrowly averted defaulting on an Islamic bond payment with the help of a $50 million interest-free loan from India.

With the nation's debt estimated at 110% of its GDP, external debt obligations are expected to increase, with Fitch Ratings projecting $557 million due in 2025 and $1 billion by 2026. Moody's Ratings shares a similar outlook, while the International Monetary Fund (IMF) has also cautioned about a potential debt crisis.

Furthermore, the new regulation requires tourism businesses to register with the central bank and deposit their foreign currency earnings into a designated local bank account within 87 days of each month’s end.

This marks the first instance of the Maldives, which welcomed 1.8 million tourists last year, enforcing such strict foreign currency controls. The Maldives Monetary Authority anticipates that this measure will enhance the availability of foreign exchange from the tourism sector.

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Source: cnbctv18‍