Maldives has set new foreign currency rules and failure to comply will lead to hefty fines

Facing a severe shortage of foreign currency, the Maldives has introduced a new regulation to tighten control over foreign currency transactions, particularly within its vital tourism industry.

The Maldives Monetary Authority implemented this regulation on October 1, mandating that all foreign currency revenue generated by the tourism sector must be deposited in local banks.

The regulation restricts most transactions to the local currency, Maldivian Rufiyaa (MVR), with only a few exceptions for specific international transactions and services.

This move follows earlier efforts by the Maldives Monetary Authority, which in August imposed a cap on dollar transactions as the country struggled with a dollar shortage.

The new regulation, published in the local Dhivehi language, specifies that most domestic transactions—including payments for goods, services, wages, and rent—must be conducted in MVR, and invoicing in foreign currency is prohibited.

Exemptions are granted for transactions related to exports, remittances, and certain legally mandated payments in US dollars.

Tourism operators, including resorts and guesthouses, are required to exchange a minimum of $500 per tourist into MVR through licensed banks for their operations.

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

The Maldivian economy has faced additional pressure due to a call for Indian tourists to boycott the country in response to President Mohamed Muizzu’s ‘India Out’ campaign last year.

Last month, the Maldives narrowly avoided defaulting on an Islamic bond payment thanks to a $50 million interest-free loan from India.

With the country’s debt estimated at 110% of its GDP, external debt obligations are projected to rise, with Fitch Ratings estimating $557 million due in 2025 and $1 billion by 2026. Moody’s Ratings offers a similar outlook. The International Monetary Fund (IMF) has also warned of a potential debt crisis.

The new regulation also requires tourism businesses to register with the central bank and deposit their foreign currency earnings into a registered local bank account within 87 days of the end of each month.

This is the first time the Maldives, which attracted 1.8 million tourists last year, has enforced such stringent foreign currency controls. Maldives Monetary Authority expects the move to boost the availability of foreign exchange from the tourism sector.