The Maldives Monetary Authority (MMA) has held closed-door discussions with the tourism industry with a view to increasing the amount of US dollars (USD) retained within the local banking system, it has been revealed.
While the central bank did not disclose any details regarding the meeting, reliable sources, including administration officials, were quoted by the local news outlet Adhadhu as confirming that discussions mainly focused on increasing the USD entering the banking system.
The MMA presented its views on how to retain more USD within the banking system and went on to propose solutions for the tourism industry to embrace, sources told the local newspaper.
The MMA, on Tuesday, released figures showing the amount of USD entering the banking system from the resorts. While tourism sector transactions with the banks last year came in at US$68 million, the sector generated US$4.5 billion in revenue.
President Mohamed Muizzu has pledged to address systemic issues whereby the USD is exchanged in parallel markets at rates far exceeding those set by the central bank.
With a view to increasing the circulation of USD, the administration has recently decided to require those who earn USD income to pay taxes in USD. The administration is also considering making it mandatory for those who earn in USD or other foreign currencies to trade or exchange a set portion of their dollar-denominated income through the banks, sources were quoted as saying.
According to Adhadhu, local businesses, led by those in the tourism sector, have expressed reservations about holding significant USD deposits at local banks. Chief amongst their concerns is the administration’s consideration to require that a set portion of the entire business revenue be traded through the local banks and banking system. Businesses, however, are far less concerned about trading a percentage of their business profits with the banks, the paper said.