President Dr Mohamed Muizzu has announced that over USD 25 million has been deposited and exchanged with local banks within a month under the newly enacted Foreign Exchange Act. The President disclosed the figure during an address to residents of Hoarafushi, Haa Alif Atoll, as part of his visit to islands in the region.
The Foreign Exchange Act, which came into effect on 1 January, mandates that tourism establishments and businesses earning foreign currency deposit and convert funds through local banks. The law aims to regulate foreign currency transactions, including import, use, possession, and exchange of foreign currency, in an effort to tackle the foreign currency shortage in the country.
In his remarks, the President stated that most resorts operating in the Maldives are complying with the regulation, and as of 27 January, USD 25 million had been converted through the banking system. He reiterated that the government intends to fully enforce the law without exemptions, arguing that its proper implementation would benefit both the government and the public, particularly Maldivians living abroad.
The foreign currency shortage has been an ongoing concern, with businesses often relying on informal exchange markets to source dollars. The new framework aims to shift these transactions into the formal banking system, though concerns remain regarding its impact on tourism businesses and whether it will ease access to foreign currency in the long run.
Maldives Economic Gateway Project Set to Begin This Year
Alongside financial reforms, the President also highlighted the Maldives Economic Gateway Project, a large-scale initiative aimed at expanding the country’s economic infrastructure. He stated that practical implementation is scheduled to begin by mid-year.
The project, described as one of the largest economic initiatives in the Maldives, includes:
- Development of international port facilities
- Ship repair and bunkering services
- Expansion of cruise tourism
- Real estate development
- Establishment of an export processing zone
The government has appointed Maldives Industrial Development Free Zone Public Limited as the master developer, with the designated project area to be classified as a Special Economic Zone (SEZ). While the government has positioned the project as an opportunity for economic expansion and job creation, its success will depend on foreign investment, regulatory frameworks, and market demand for the services it aims to provide.
Government Economic Policy and Fiscal Constraints
During his address, the President also reflected on broader economic challenges faced over the past year. He reiterated that despite financial pressures, the government has avoided printing money to fund expenditures, a move that could have led to higher inflation and further weakened the Maldivian rufiyaa.
However, with rising fiscal deficits and debt servicing obligations, the success of measures like the Foreign Exchange Act and Economic Gateway Project will be closely watched as indicators of the country’s economic trajectory. The ability to attract foreign investment, improve dollar liquidity, and ensure long-term economic stability remains a key concern for businesses and policymakers alike.
