Maldives President Assures Room for Dialogue Despite Push to End Dollar Black Market Through Sweeping Forex Reforms

President Dr Mohamed Muizzu has announced that his administration will tackle the entrenched issue of illicit dollar trading on the black market through collaborative dialogue, assuring the public of a positive outcome despite declining to set a definitive deadline for its complete eradication.

Speaking during an appearance on the state media podcast “Nation Chat,” President Muizzu addressed public concerns regarding the timeline for dismantling the dollar black market. He emphasised that the underground trade is a systemic issue with deep historical roots rather than a recent development, meaning its resolution requires deliberate and sustained effort.

“Rather than giving a specific date for this, I believe what we can say is that, God willing, we will make good headway,” President Muizzu said.

Reflecting on the state of the nation when he assumed office on 17 November 2023, the President noted that the Maldivian economy was facing severe strain. Despite inheriting a fiscal deficit, he highlighted that his administration has successfully paid off USD 1.3 billion in debt over the past two and a half years while systematically working to stabilise economic affairs.

Addressing the structural complexities behind the currency crunch—including how foreign workers remit funds abroad and how foreign currency is handled domestically—the President reiterated that corrective measures would be implemented methodically.

“This is everyone’s country. Therefore, God willing, the results will be good,” he added, stressing that the government intends to proceed with the participation and input of all stakeholders.

The President’s remarks come on the back of escalating government scrutiny over unauthorised foreign exchange operations. 

Speaking at a press conference at the President’s Office earlier this week, Minister of Homeland Security, Ali Ihusaan revealed that an ongoing investigation into seven foreign exchange venues uncovered a staggering USD 77 million sold on the black market over the past nine months.

According to Minister Ihusaan, investigations indicate that these unlicensed operations neither import dollars into the country nor engage in legitimate revenue-generating services, prompting authorities to aggressively trace the origin of their dollar supply. Additionally, findings revealed that the volumes being traded on the black market by certain resorts surpassed the mandated 20 percent threshold required to be channeled through the banking system under Maldives Monetary Authority (MMA) regulations.

In a decisive legislative countermeasure, the Parliament has passed crucial amendments to the Foreign Exchange Act. The newly passed bill mandates that all entities generating foreign currency earnings—including resorts and guesthouses—must convert 40 percent of their monthly foreign currency revenue through local banks, effective from the first of next month.

The legislative push has met with resistance from the tourism sector. The Maldives Association of Tourism Industry (MATI) has issued a statement declaring the 40 percent conversion requirement unsustainable. MATI pointed out that resorts carry heavy operational expenses denominated in dollars, including fuel, payroll, service charges, multiple forms of taxation—such as TGST, Green Tax, Withholding Tax, and Income Tax—along with lease rent and foreign currency loan obligations, making the new mandate an unbearable burden for the industry.

As the government presses forward with its legislative and investigative measures to rein in foreign currency leakage, the administration faces the delicate challenge of balancing stringent fiscal enforcement with maintaining industry cooperation to stabilise the nation's broader economic outlook.