President Dr Mohamed Muizzu has outlined a decade-long plan to reduce the Maldives’ dependence on foreign currency and gradually build a financial system centred more strongly on the Maldivian Rufiyaa (MVR).
Speaking on the country’s economic outlook, the President said the transition could not be achieved overnight due to the Maldives’ extensive links to international investments, sovereign loans and other foreign financial commitments.
“This is not something that can be done overnight. It is interconnected with investments made in the Maldives, loans and all similar commitments. It is estimated that taking it all the way to that point will take a 10-year period,” he said.
The Maldives currently operates under a mixed financial system in which foreign currencies, particularly the US dollar, are widely used in domestic transactions. President Muizzu said the system differs from the practices of many other countries, where foreign exchange is generally converted into local currency before domestic transactions are carried out.
He said the government would therefore pursue the transition through a carefully planned and phased approach, requiring coordination among financial institutions and other stakeholders. The objective, he said, is to strengthen the MVR, reduce excessive reliance on foreign currency and reinforce the country’s economic sovereignty.
The President also ratified seven bills and amendments, covering the Goods and Services Tax Act, Income Tax Act, Foreign Currency Act, Maldives Fisheries Act and Tax Administration Act, as well as new laws on leasing uninhabited islands and lagoons and land transport.
He said the legislation was designed to directly benefit Maldivians while supporting the government’s broader economic and development objectives.
President Muizzu said amendments to the Foreign Currency Act would provide economic relief and help address parallel-market US dollar exchange rates. He said government assessments showed that the new foreign-currency surrender and exchange requirements would not disrupt resort operations or prevent employees from receiving salaries in US dollars.
He warned employers against using the legislation as a reason to reduce or withhold dollar-denominated wages and called for cooperation from the tourism industry and enforcement authorities.
On taxation, the President said amendments to the GST Act were necessary following the introduction of the destination principle in the tourism sector.
Changes to the Income Tax Act will revise withholding tax rates for foreign construction companies, which the government says will help create a more level playing field for Maldivian companies competing for contracts. Amendments to the Tax Administration Act will also restore enforcement powers to the Maldives Inland Revenue Authority (MIRA).
The President said the new legislation on leasing uninhabited islands and lagoons would support efforts to diversify the economy.
Meanwhile, amendments to the Fisheries Act are aimed at strengthening the protection of Maldivian waters, expanding aquaculture, and supporting the development of industry infrastructure and sports-fishing harbours.
The new Land Transport legislation is intended to strengthen road-safety regulations and help reduce traffic congestion in the capital, Malé.
President Muizzu said the reforms form part of the government’s wider effort to modernise the country’s legal framework and support its goal of transforming the Maldives into a developed nation by 2040. He also said a stronger legal framework would help protect citizens’ rights and reiterated his administration’s commitment to the impartial application of justice.
The seven laws have been published in the Government Gazette. Cabinet members and senior government officials attended the ratification ceremony.
