The private sector has expressed concern at the Maldives Monetary Authority (MMA)’s announcement last week that it it intends to enforce the use of rufiya for all transactions conducted in the country.
The move effectively outlaws dollar transactions in the Maldives, with the intention of funneling foreign currency through the local banking system in a bid to combat the country’s dollar shortage.
President Mohamed Nasheed backed the central bank’s move, and the prohibition of the use of any currency other than rufiya for payments including remuneration for work, services, fees or rent.
The ‘grey’ dollar economy has existed in parallel to the local currency, and has insulated businesses such as resorts from the inflation of the rufiya, pegged at 12.85 to the dollar for almost a decade despite the global economic recession, printing of currency and issuing of T-bills.
“This regulation has existed since 1987,” observed Ahmed Adheeb, a local financial expert working in the private sector, adding that the lack of enforcement had protected the private sector from the country’s monstrous deficit and spend-happy state budget.
The MMA’s announcement came at time when “the convertibility of rufiya [into dollars] is in question because of the deficit, and the pumping of rufiya into the system.”
“Is this the right time to enforce this regulation?” Adheeb asked. “We met with the government and told them clearly that that our industry will face a lot of consequences if this happens.”
Local travel agents were one example of businesses that would be affected, Adheeb said.
“They [earn dollars] and contribute a large inflow of dollars into the economy. If they have to pay resorts in rufiya, they will lose their competitive advantage.”
The enforcement would take “the openness and flexibility of out of the economy, when the real issue lies with the state budget,” he said. “This will make business so difficult – it is very dangerous to the economy for the government to start sorting out industry before the state budget. And what of the practicality of it?
“The government needs to address the deficit and cut down its expenditure. State income will increase gradually, but if we keep spending like this we are headed for disaster.”
Minivan News spoke to the manager of one import business, who relies on resort customers paying in dollars to be able to buy stock from overseas.
The MMA’s decision, he claimed, was “absolutely absurd.”
“They can do what they like – but does this mean resorts must pay in rufiya? At a time when there’s no currency stability? Will resorts have to post rufiya prices in tourist brochures? If the objective is to drive foreign investment out of the Maldives with a raft of new taxes and a confused and bizarre monetary policy, then they’re being quite successful,” he said.
Another manager of a commodity import business Minivan News spoke to bluntly stated that she would be unable to comply with the regulation “because we trade in dollars.”
She added that her business, which banks locally and was sorely hit by the dollar shortage and the reluctance of banks to convert local currency, had improved following the government’s decision implement a managed float of the rufiya.
“We found resorts were more willing to pay in dollars once we set our rate at Rf15.42,” she explained. “But unless the banks are going to exchange rufiya to dollars consistently and at a sensible rate, this is going to cause absolute uproar. And how on earth are they going to police things like payment of rent?”
Economic Development Minister Mahmoud Razee told Minivan News that the government was “trying to make sure that foreign currency goes through the banking system, by enforcing the legal tender.”
“The reason we are doing this is so importers can go to the bank and request dollars from the banking system,” he said. “This will not stop people having a dollar account, it will just stop transactions not in the legal tender.”
Every restaurant at tourist resorts would be obliged to change its menu to rufiya prices, he acknowledged, “but almost every resort and hotel already has a money changer.”
“The MMA will be able to take action if there is a transaction that does not take place in legal tender, and take [the parties] to court,” he said.
The MMA’s announcement came days after the government announced exchange control regulation on the salary of expatriates, legally limiting their ability to transfer money outside the country.
“We don’t want a lot of illegal workers sending foreign currency out of the country, working on the side and taking jobs from locals,” Razee said, explaining that expatriate workers would be obliged to prove they were working in the country legally at the point of transfer, and be restricted in the amount they could send overseas.
“The Ministry of Finance will set a percentage, say 90 percent, of the salary that can be remitted,” he said.
Adheeb was critical of the decision, suggesting that the government had chosen a critical time to impose exchange control.
“We have said it is not going to work as we have a small population and we need foreigners to work here,” he said. “[Issues concerning] non-skilled labour are a problem of regulation, but importing skilled labour gives us a competitive advantage at a time when there are issues converting the rufiya,” he said.
“I question the practicality off this – the banks are currently struggling to deliver services to their existing customers. How will they know if an expat is an illegal expat? This will just create a blackmarket for illegal banking transactions.”
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Its abt time.. All trading & business to be conducted in local currency !! If you fail, you get jail !!
Good job Mr Nasheed
LOL....Center-right government indeed. 😛
Adheeb seems to be an idiot.
The Constitution of Maldives says that the currency of Maldives is Rufiya.
I don't believe we should have Rufiya and US dollars as our currency, even though we have tourism as our No. 1 industry and we import almost every thing.This is all the more reason why we should enforce legal tender for all transactions.
The problem is for too long we have allowed Rufiya AND US dollars to be our currency and all the big shots in business is happy that they can keep increasing their worth while the country starve.
I was shocked to find that the Trends (Restaurant at Nasandhura Palace Hotel) has the prices in dollars. It seems to me that the place is not in Male', Maldives and locals are not welcome.
Dear Mr Riyaz Rasheed, MP.
I am sure you're mad and busy drafting the bill to stop this from happening? No?
How can President Nasheed do this to you when you're just about to become rich.
Socialist Republic of Maldives..
Where the Finance Minister President and all are haters of hard working private sector.. HEHE What a center right governemtnt.. tsk tsk
@Iraj
private sector or robbers? haha too bad the thieves can no longer screw poor citizens by demanding dollars for transactions.
@Iraj
the currency of Maldives is rufiya. if private sector is so fond of dollars go do business in the US.
Center right is the justification for privatization. Means big fat commissions for Anni clan.
Why is it then resorts have to pay their rent in USD, why is it then bed tax and TGST have to be paid in USD? The regulation shall be applied to the Goverment as well. If earn in Rufiyaa how can the government expect you to pay the taxes and rent in USD.
Resorts hold money changers license, when a guest goes to exchange the currency they buy USD for Rf.10.28 while in Male' the rate is 15.42. The guest cannot come to Male' to change the currency. Here again the resort owner is getting USD at a better price.
What sort of a policy is the MDP govenment adopting? I think they cannot comprehend anyting.
Shaheem then tell your authorities not to print or put ruffiya from debt to the economy. If you want respect for ruffiya then earn it not force it.. HEHE I wonder who are the robbers? who works hard to create money from business or lazy buggers who is earning huge salaries from a deficit budget in the name of people for the people.. Great !!
Great move by the government, if the resorts want put their money in Local banks why not.
No we need to get rid of Rufiya! Totally! Earn and pay everything by US dollars! Its the magic solution to all these issues! Our central bank cant print US dollars, so you wont have a deficit! Spend what you have only! You will solve the issue with banks on buying foreign currency for imports, because you already earn in foreign currency! Everything solved!
MMA Authorities knows very well that if they use EURO as standard currency then they will be on the safest side and country,s economy will also boom. But i dont know why nobody think on that part in these many years.
Whole world knows that Maldives,s economy is based on tourism, its highest tourist are from European nation which pumps billions of Euro in Maldives.
Most of the business which we are doing payments are purely acceptable in Euros. Top Exporter like MIFCO also making payments in Euro.All resorts gets millions of Euros monthly as sources of income, still we are looking for Dollars which is much volatile and in recent time its become much stronger than earlier which means again we needs a devaluation of currency in a month .
I strongly recommend the central bank MMA Authorities to understands this situation with long term project view for the development of Maldives and please humble appeal to Government of Republic of Maldives please see the seriousness of the matter and bring some healing to the sufferers and not wounds.
I don't understand why this is such a big issue?! I mean, Maldivians travel a lot right? Do they ever see in Singapore hotels any menus in USD?? Many of us have been to Malaysia and never saw a single product or service being priced in other than the Ringgit!! You cant even open a bank account other than in Ringgit.
Same applies to Bkk and everwhere else too!!
@Iraj
dont be a fool. goods and services in maldives should be valued and transacted in rufiyaa. we cannot allow the robber barons in bazaar and resorts to degrade the value of our currency and feed off our people and resources.
who is this adheeb? an authority on maldives economy? any book by him? is he part of MNCCI as treasurer, whose interest he is working? minivan should ask people with experience on Maldives economy specially the elderly retired who knows the history behind our economy..fresh out of school graduates 101 perspective that lacks cultural and historical basis is pure bullshit
“[Issues concerning] non-skilled labour are a problem of regulation, but importing skilled labour gives us a competitive advantage..."
There goes our hero Adheeb out on a limb about "competitive advantage". Over whom? In what market? What a lot of non-sense.
This is a policy that has long been unpoliced and totally neglected. Look this is very simple. Even a 7 year old can understand the principle behind this.
(1) We only earn foreign currency if we either export a product or a service. 90% of our service industry is based around tourism.
(2) By forcing everyone to use the legal tender of MRf, it creates a liquid market for the MRf against all the other foreign currencies entering the country.
(3) Long term, this will non only help stabilise the MRf, but will also help businesses!
Humans are always afraid of change; but change needs to happen. The government is following very sound economic principles:
(1) Managed flotation of the MRf.
(2) Enforcing the legal tender.
(3) Introducing fair taxation.
(4) Trying to reduce the massive budget deficit.
What's not obvious is the government policy on increasing productivity and diversifying the economy in new areas that will earn foreign currency.
MDP is robbing us......This government is evil....We have to get rid of it...They are going to enslave us and stay in power for 500 years....President Nasheed has all the colors of a ruthless dictator....I say make the market as liberal as possible if someone wants to transect in dollars so what? thats his right....This country is becoming so communist.
@Shaheem
seems like you are the blind fool... the rufiyaa was devalued because the government is spending much more than it takes in and that was the only way to balance the books. Knocking 20% off the value of the rufiyaa was the only way to effectively cut public sector expenditure since the CSC isn't playing ball and our parliamentarians and politicians are only concerned with how much more cash they can grab from the people. You cannot keep printing money, especially in an economy that is solely dependent on imports - eventually people will try to use that money to buy imported items but if the foreign exchange isn't there to back it up you are in trouble. Nor will your friends keep lending you money if they know you will never be able to pay it back.
There are actually plenty of dollars around but who will put these in a local bank when people are unsure whether they can take them out the next day? All that the restrictions will achieve is make sure that anyone who has foreign currency takes it out of the country as soon as possible which will further exacerbate this death spiral we are in. And prices will go up further since businesses now have to pay higher salaries to the expats to compensate for the percentage cap on what they can send home to their families - the expat's costs of living don't change just cause Nasheed caps their remittances. If they can't earn enough in this country they will just go elsewhere.
Its a good thing that there are so many qualified and hardworking Maldivians lining up to take the jobs that will be vacated by these foreigners.
convertability of local currency is NOT in question......... just take some ruffiya out of the country and try for yourself.......... j
@Shaheem........... sounds like common sense .......... j
choice is simple.
Either we use dollar/Euro as legal tender and abandon sovereignty for ever OR enforce rufiyaa as legal tender as per constitution.
Resorts should run on rufiyaa only. Hope it is made illegal for tour operators to pay in dollars to resorts.
Also tourists should pay for their drinks in rufiyaa..
Lets see what MATI says.. and how patriotic those guys are..
“I question the practicality off this – the banks are currently struggling to deliver services to their existing customers. How will they know if an expat is an illegal expat? This will just create a blackmarket for illegal banking transactions.”
The banks are struggling, so we put caps on how much they do?
We can't identify an illegal from their obvious lack of a work permit card?
Black-market for "illegal" transactions does exist, for drug dealers, smugglers and other criminals. It is called money laundering.
“The Ministry of Finance will set a percentage, say 90 percent, of the salary that can be remitted,”Adheeb was critical of the decision, suggesting that the government had chosen a critical time to impose exchange control.
What negative effect does this imposition have other than a legal worker being unable to help his illegal friend?
That is why I consider Mr. Adheeb a nay saying prophet. He criticizes without thinking through his arguments, neither does he put forward solutions. He has never suggested anything other than to "reduce" costs which a 9th grade econ student can suggest.
@Moosa
Dont be silly. the dollar was devalued because the robber barons are hoarding the dollars and stashing it in banks abroad. as you said there's enough dollars to go around but these shameless thieves have got it locked in their foreign bank accounts.
adheeb is serving the robbers. they want to squish out the dollars and load them on boats to countries where they have accounts.
the government is not putting exchange controls. the authorities are just enforcing a regulation that says you can't demand dollars for a local transaction. common sense. adheeb must be a fool if he can't understand that.
Welcome to the socialist Republic of Maldives, We in Sri Lanka put forward Socialist because we are socialist country.. So why fool the people with center right? take all the taxes, block all the dollars and lets make a big government for enjoyment of Ruling party and family people like ours.. Crush all the local businesses and resort owners, only ruling party people can do business.. Only ruling party people can say anything about economy, wonder why people are so jelous with one guy who have commented hehe must be a mover and shaker down there.. Guys like peasant and Shaheem you guys do not qualify to be on media, so be at your home or gov office commenting on news papers waiting for the big gov to give a salary or welfare.. get a life macha.. ..
If you go to Sri Lanka or Malaysia or Singapore or Australia, or just about any other country in the world as a tourist, you can pay for your hotel or or services and products in the local currency. Heck, the Burj-al-Arab might be one of the most expensive hotels in the world, but they still charge local currency from all of their guests. So how come Maldivian resorts get to charge dollars. It would make more sense if we accepted euros and yen along with renmibi right alongside the dollar, seeing as all those are accepted in the world's foreign exchanges. And any business person saying that the income of dollars would be less is dead wrong. If John Doe from Plainsville, USA comes to Maldives, he would bring dollars with him. He'd then sell his dollars to either the bank at the airport or to the resort itself or some other authorized money changer to buy MVR so that he can pay for any goods and services he may partake of. Also, becos he is more likely to sell his dollars at the bank branch at the airport, we'd have more dollars in the system than if the dollars went straight to the resorts which are now in effect their own little deposit banking units. As for Maldivian businesses that need dollars to buy goods to import from countries like India and Pakistan and Sri Lanka, lobby for the govt of Maldives to male bilateral agreements which would in effect allow for the MVR to be traded within our major import markets. Maldives does billions in trade with India and Sri Lanka and Malaysia. They're bound to be receptive about a mechanism which would allow more trade. I might not support President Nasheed and most of his policies or his govt in particular, but the currency policy is sound. Adheeb and other "pundits" may nay-say all they want, but this country needs to wean itself off the dollar and enter the foreign exchange market of the 21st century and try and make our own damn currency stronger. If we can be so narcissistic about Maldives the "100% Muslim country with the same language and the same heritage" I think we can find some space in ourselves to bring pride to our currency too.
Hahaha MDP people in political positions cannot digest Adeeb's comments as he is on all media including minivannews. It seems what he says is becoming a reality and from the above comments everyone is so jelous hehe, I remember When he was a teen all boy s were jelous because he was so stylish and good looking but all girls go crazy hehe.. Now all mdp ppl who are in political jobs are jelous because he is educated and using what he studied and shares the real economic situation and stupid decisions by policy makers and still famous even without his looks.. Keep rocking Adeeb dear.. we are with you..
@Shimana
we? adheeb educated? lol
@ Shaheem
Anni eductaed?, Reecko Moosa educated?, Alhan educated?, ...So you would believe these "educated" people but not Adheeb bcs hes not educated???.....MDP people are crazy...hahahahah LOL
hhmmmmm..Shaheen seems to be someone who writes without evidence....Which robbers are you talking about and how much did they steal??Do you have any evidence? if you do i suggest you go the courts....Stop making baseless accusations.The economy is in its last breaths because this government has failed on its promises...High expenditure and corruption by the MDP government is to blame for our economic vows.
Regardless of whatever they say, this act, if effectively upheld, can pull us back on to a smoother ride economically.
And it looks like this is the only option President has on his table, which would actually offer him tangible browny points before the election. The other brownie generator are the two words '30y', which Anni has used through out with great success, boils up anyone and everyone, even though they have gone bankrupt because of the current governments actions.
So Anni, get support not for the great economist he is, but because he is such a good liar and con-artist, and still can hook public with the past dictator stories.
Who is this Adheeb man? Does he know exactly what the problem is? Now this man works for a company that charges in US Dollars for the services it renders, breaching the Monetary Regulations to the core. Surely, excess liquidity in the system is a problem. This whole problem was created by a man that Gayoom appointed as the Finance Minister in 2005. The budget was bloated three fold from Rf 4 bn to 12 bn overnight! The problem was further exacerbated due to the counterfeit Rufiyaa notes that were pumped into the system for the 2008 Presidential Elections. The phantom projects that were included in that year's budget were never realized, hence, the entire budget deficit was monetized. We earn sufficient amount USD from the tourism industry. Our earnings from tourism industry stand between USD 2.2 bn and 2.5 bn. The problem is that these dollars never get to see the day light in the Maldives. These dollars are parked either in Chase Manhattan, NY or in Swiss banks! The government and the authorities need to bring this money into the Maldives and make them available in the banking system. Last year the foreign currency deposits of the entire banking system stood at USD 550 mn! And these deposits have been utilized in giving away loans or opening L/Cs, TTs and other remittances. Banks maintain a meager 2 % of the deposits as cash, which is translated to just USD 11 mn for all the banks. We have an import bill of USD 1 bn, and say take another USD 300 for debt payments and another USD 150 mn for expatriate labour remittances, we still should have an excess of USD 1 bn, if we had those tourist US Dollars in the Maldives. To get those funds, we should create confidence in the banking system. Now where on earth do they allow to settle your bills in another currency? If you go to India, Thailand, Indonesia or Malaysia your are required to pay in local currency to settle the bills; they don't allow you to pay in Timbuktu Dinar!!! Come on get real man! MMA in fact should revoke the licences of all those money changers who do nothing but buy US Dollars and sell them in the parallel market. By enforcing the existing monetary regulations would certainly create a demand for Maldivian Rufiyaa and hence, would increase its value vis a vis other foreign currencies. The foreigners who patronize the services of our resorts would have to convert whatever the currency they are carrying to local currency. And the foreign tour operators would also be required to transfer the US Dollars or whatever the foreign currency to Maldives and get tehm converted to Rufiyaa to pay for the filthy rich resort operators! MMA should be stringent in enforcing the Monetary Regulations. The whole problem is caused due to a shortage of US Dollars in the formal banking system. Having the band and allowing the market forces to determine the equilibrium rate would not work, because there are only handful of guys who earn these Dollars, and they act as an oligopoly. And we need US Dollars like water for our survival, because we are a small open economy that is totally dependent on imports. With such a high inelastic marginal propensity to import and an inelastic demand for our tourist resort services (foreigners do not come to the Maldives because it is cheap, we cater to niche market), the trade balance would not improve due to the devaluation since it does not fulfill the Marshall Learner condition!! Our exports would not become relatively cheaper since they are all denominated in US Dollars and we cannot switch to inferior cheaper locally produced goods since we do not have that option! Besides, with the continued shortage in US Dollars people are going to hoard them, expecting the value to go up the next day!
Dollar crisis can be removed only by making value of ruffiya in the market. This is possible if ruffiya can be used for every transaction around Maldives just like any other country. Those expatriates who required dollars for remittance should be able to remit transfer with ruffiya only after showing the valid documents.
Any international transaction which required foreign currency should be purely investigate and then only issued for the individual and firms.
If above mentioned points can be implemented Maldives will be back on track for developments.
@shimana: you are an idiot.
@shimana: you are an idiot. you can't even spell jealous correctly.
thanks everyone for the historical perspectives and for others stop peddling bullshit
Ok, Lets look at a few facts.
Few Facts -
- 12.37 Billion MRF 2011 National Budget
- 3.5 Billion MRF budget Deficit
- Exports: 163 Million USD (2009)
- Imports: 967 Million USD (2009)
(Source:CIA World Fact Book)
Citizens, Numbers Don't lie!.
Policies that causes more harm than good:
- Passing an unbalanced budget
- Debt financing a deficit Budget
- Stimulating/quantitative easing/printing money (same thing, whatever name you call it)
- Out of control excessive government spending
- Pegging currency
- Price controls and enforcing strict trading rules
- Building a welfare state when the country is in debt
A bad Argument - Businessmen are robbing the citizens and purposefully raising prices.
Reality - The new peg did not end the black market. As long as a currency is pegged there will be a black market. As long as there is peg, banks and money exchangers cannot legally compete in the market freely. Which means banks/exchangers are pretty much in the same situation as before, having a dollar shortage. With a new peg to compare, price in black market also increased.
For the Businessmen / Traders the only place to purchase much needed USD for their imports is the black market. It is self explanatory, when the cost for importing products are high, the selling price of them will increase as well.
A satisfying truth - Businesses exist to serve its customers. (not to rip them off)
Real Solutions:
- Remove the Peg altogether
- Stop trying to control prices (this will cause more shortage eventually)
- Cut Government expenditure
- Balance the budget (an idea:don't pay salaries of MP's if they pass an unbalanced budget)
- Government must stop trying to build a welfare state
- Government must think beyond the next election, have some long term plans in establishing ways to increase exports of this country and empowering citizens.
Would be helpful - If Citizens learn the basics of macro economics and likewise the elected government officials ought sit down and read a macro-economics book.
Our economy is in a sever state of ill health. We have to put aside politics and personal rage and see the reality from an economics perspective.
@LCG.MV
- Exports: 163 Million USD (2009)
- Imports: 967 Million USD (2009)
In economic terms, services rendered for payment to a foreign party is an export.
@Nars
you fool. anni has a phd from university of liverpool.
@ peasant
Agreed. Tourism income = USD 224* Million USD (2008) - (source - Tourism Year Book 2009)
Add that to Exports =
- Exports = 387 Million USD
- Imports = 967 Million USD
- Imbalance = 580 Million USD
* The actual amount (2,884,000,000 MRF is converted to USD at 12.85 and rounded off - figures from 2009 Tourism year book)
Adheeb is right in a way. All of you talk about the ability to charge in their local currencies in places like UAE, Singapore etc. You also can convert your currencies to any other currencies in these countries.
This is the problem in Maldives. If Banks are able to convert the Ruffiyya into foreign currency then there would be no problem.
The Government is fishing hoping that by doing this, there would be enough dollars available in the Banks but they are not sure.
What would happen is the traders and business people who import and supplies even to resorts would not have the guarantee of being able to get dollars from the banks, if the resorts pay in ruffiyas. That means prices would go up.
This also means that all salaries of foreigners working in Maldives would have to be paid in ruffiyas and big foreign companies would not invest in Maldives if their staff has to be paid in ruffiyas as there is no guarantee that they can get the foreign currency from the banks as staff would not come to work in Maldives in this scenario.
Uncertainty in the market is the worst thing one can do.
This is a stupid regulation by the Government. What they should do is to reduce the budget and make regulations that the Tourism Industry funnels their foreign currency through Banks in Maldives.
Who said that by pegging the exchange rate would always create a black market?? Pegging the exchange rate and anchoring it at a realistic harbour would be good for the Maldives. Allowing Rufiyaa to float would only create uncertainty in the market and motivate people to hoard the Dollars. Of course, with a pegged exchange rate you have to have sufficient reserves to back it. As as has been mentioned by Hassan, we need to do something to attract our US Dollar earnings that are floating across the globe. Conventional economic theory postulates that when you get a higher rate of return then a rational person would make a positive investment decision in that particular asset, in this case the US Dollar deposits. However, in the Maldivian context this would not hold, since the "haves" of the US Dollar do not have much faith in our banking system, and hence would not deposit their US Dollar earnings in a local bank. There is no guarantee that they would get back the money they deposited! This is the fundamental reason as to why the businesses are not keeping their money with the local banks, especially with the stat-owned bank, where the bulk of its portfolio is in non-performing category. The don't have the confidence in its management, board, nor with the business strategies being pursued.
The other reason as to why these guys are not bringing their US Dollar earnings to the Maldives is because of the fact that, they do not want the authorities to know exactly how much they earn from the resorts. Of course with the TGST, this argument does not hold, but previously, the businesses were kept in a suspense as to the imposition of a corporate profit tax. The previous regime was talking about a corporate tax for the last ten years, but never had the guts to implement it, because of the potential political ramifications. Now that every one knows there is a corporate tax, this again may not be a valid reason for keeping the Dollars abroad.
Further, the businesses do not have the confidence in the macroeconomic policies being pursued by the government. They are so haphazard and inconsistent. Businesses make investment decisions on perception as well. Government and all the other stake holders need to step up its efforts in creating a positive image for the country. Our macro economic fundamentals are not strong enough to have a sophisticated floating exchange rate regime. The intervention of the MMA is paramount in establishing stability in the market. We are talking of an open economy that is controlled by a very few cash rich parties. The very oligopolistic nature of our business environment does not warrant a floating exchange rate regime, when the supply of US Dollars are being controlled at the behest of these few cash lords. No wonder the US Dollar exchange rate is over RF 18/- now. We should make it mandatory for the resort owners to sell at least 25 % of their US Dollar earnings to the banking system. If you do not want to compel them into selling the US Dollars, at least consider giving them some incentives such as, tax rebates or relief on import duties to make it more market friendly. Issuing US Dollar denominated government securities will also not work, for reasons such as the lack of confidence in the government's ability in managing the macroeconomic situation and the government's ability in redeeming the securities, back to the investors, let alone the interest. Government should have sufficient sources of revenue to service such securities, or else it will have to again issue additional securities in order to service the previously issued securities that could trigger a vicious circle! I humbly request the authorities to come up with a strategy to bring back those globetrotting US Dollars to the palm- fringed, white sandy beaches of the Maldives! After all those US Dollars were earned by selling our beaches. The Maldivian economy along with its lovely beaches deserve better!
Each and every decision that the Government makes has to pass one test: ie, does that contribute to economic growth of Maldives.
If any decision fails this test, guess who would fail in 2013..
Well lovely beaches required well maintained and sources for the same is getting in Euros from the European tourists & import / export business. Then we are converting Euro into dollars then crying that we have shortage in the circulation of Dollars in the market.
Can government clearly explain how much income does each resort and other businessmen are generating along with the actual currency.You all just crying but not ready to understands the reason for the same is our wrong steps.
When economy is down its quite obvious that the currency value with comparison to other standards currencies will come down. But for the long term growth don't you people think that usage of dollars and euro should not be allowed in the common ruffiya market?????
The best and only solution is to open the market completely for ruffiya across every part of Maldives for all kind of transactions,and foreign currency should not be given for market circulation. Foreign currency should be make available only via bank transfers and for import and export dollars can be released only after confirming the complete investigation.
I agree a tourist cant be consider in this case as across the world foreign currency are exchanged from tourist but it should be done only with the concerned authorities and not by any local or expatriate in any part of the country.
If the main target is to control illegal money transfers by expat...MMA can develop a system with database of approved work permit holders which is interlinked to bank and money service agents. Trace out the people who do money laundering instead of troubling all others...