Tag: economy

Sri Lanka must take cue from Maldives’ tourism tactic: Sunday Times

Sri Lanka’s The Sunday Times reviews successes and risks in Sri Lanka’s tourism industry, highlighting the Maldives as an example of successful marketing in a tight economy.

“Sri Lanka could take a cue from the Maldives where active promotion in going on to promote the destination, additionally now as a mid-market destination, from a high-end location. Resorts in the Maldives charges rates from US$200-300 upwards to over $1000 per night, and the authorities are now looking to attract the mid-market clientele which is also Sri Lanka’s market – though the two markets have different attractions.”

Adverse publicity is a weakness for Sri Lankan tourism, the Times noted, citing the Maldives as an example of proactive marketing in a time of change.

“[The Maldives] islands are attracting thousands of Chinese, which has made China the biggest source market for the Maldives in the past two years. According to one travel agent in the Maldives, ‘every agent is scrambling to get a slice of the Chinese market.’ The Chinese are seen as the biggest tourism source market of the world while India is also becoming a huge travel market. Sri Lankan hotels are still western-oriented with a few frills to meet the needs of other travellers.”

Read more

Likes(0)Dislikes(0)

STO profits rise 79 percent in first half of 2011

The State Trading Organisation (STO) saw a 79 percent increase in profits in the first half of 2011. STO earned Rf39 million (US$2.5 million) more in the first half of 2011 than in the same period last year.

According to second quarter earnings published by the government company, STO made a half-year net profit of Rf88.4 million (US$5.7 million) this year.

Likes(0)Dislikes(0)

Government to release full details of economic reform agenda

The government will publicise its entire economic reform agenda at a launch on Monday, President Mohamed Nasheed has said.

Speaking during his weekly radio address, Nasheed downplayed the “unfavourable consequences” of the reforms he said were being predicted by some members of parliament and “a few business associations”, stated that the package of bills would allow further development and promote growth in the Maldives.

Nasheed also noted that 40 convicts had been released under the government’s ‘Second Chance’ program and were currently being rehabilitated. The government is also running a program to train 8500 local workers in various skills, in a bid to combat widespread unemployment, particularly among young people.

Likes(0)Dislikes(0)

Cabinet decides to only accept Maldivian rufiya as taxes

Cabinet has today decided that all fees and taxes payable to the government must be paid in local currency, in a bid to overcome the dollar shortage currently being experienced in the country.

The decision comes after President’s official visit to Seychelles, following which President Mohamed Nasheed met with the press and shared advice from the Seychelles Finance Ministry and Central Bank Governor to insist on the use of local currency as legal tender.

Speaking to the press, Nasheed said he met with the Governor of Seychelles Central Bank and Finance Ministry’s Principal Secretary for Finance and Trade Ahmed Afif.

‘’I had a long discussion with Mr Afif and Governor of Seychelles over this issue,’’ President Nasheed said. ‘’We are on the right path now, we can reform our economy better than Seychelles.’’

Nasheed said Afif continuously told him to use local currency as the legal tender to overcome the dollar shortage.

‘’They advised us to use local currency as the lead currency, so for example all taxes have to paid in Maldivian rufiya.’’

Nasheed explained that if the Maldivian rufiya was used as the lead currency, all resorts and individuals would have to change dollars into Maldivian ruffiya to pay the taxes and fees to the government.

‘’To get Maldivian ruffiya they will have to go to the banks, which will increase the amount of dollars that the banks will have,’’ Nasheed added.

The President also noted that the inflation rate of Maldives was low compared to neighboring countries.

‘’I did check the price of diesel and rice and flour, it is still cheaper in the Maldives,’’ he said.

Likes(0)Dislikes(0)

Maldives can learn from Seychelles economic recovery, says President Nasheed

The Maldives can learn from the economic and fiscal reform of the Seychelles in reforming its own stricken economy, President Mohamed Nasheed has said during his visit to the neighbouring island nation.

“Our fishing industry is worth about US$500 million a year. We want to see how we will be able to work with Seychelles on improving on its productivity,” said President Nasheed, following the meeting with his Seychelles counterpart President James Michel.

President Michel said small island states shared many similar challenges, “such as economic development, climate changes, fisheries, tourism, and piracy. We have many commonalities and we share the same ocean. We must do more to improve our regional trade and share our expertise, especially as we are both focused on fisheries and tourism, and in this way develop sustainable solutions to regional challenges,” he said.

The two countries have discussed developing a maritime company in the Maldives, and the possibility of developing a joint airline corporation.

During the delegation’s visit, President Nasheed was briefed by the Governor of the Central Bank of Seychelles, Pierre Laporte, on the economic reform strategies adopted in the Seychelles.

Not far from home

The Seychelles is an upper middle-income country that, like the Maldives, has enjoyed rapid growth led by a tourism sector that, after emerging rise in the 70s, now provides 70 percent of the country’s foreign currency earnings and 30 percent of its employment.

In 2006, the government of the Seychelles allowed its rupee to depreciate after years of allowing it to be overvalued – a similar situation to the Maldives, which earlier this year launched a managed float of the rufiya, within 20 percent of a 12.85 peg, which saw it rocket to the maximum 15.42 where it now remains.

The value of the Seychelles rupee plunged 10 percent in the first nine months of 2007, and the country was subsequently hit by the economic recession and a foreign exchange shortage – another problem familiar to the Maldives. This culminated in a debt crisis in 2008 that threatened the country’s comparatively high standard of living.

The International Monetary Fund (IMF) in its country report on the Seychelles (published in January 2011) commented that in the years following 2008, the Seychelles had “achieved a remarkable turnaround of economic policies, including foreign exchange market liberalisation and floating of the rupee” – achievements, the IMF noted, that were “all the more remarkable since the Seychelles had to confront at the same time a global crisis that lowered tourism receipts”.

The IMF’s 2011 report documents the remarkable economic recovery of a small island nation, during a recession affecting its core business. In particular, the report praised the Seychelles for renewing the confidence of private investors, “which translated into increased foreign direct investment to develop the islands’ exceptional tourism potential”, the stabilisation of the exchange rate, price stability, and the rebuilding of reserves “which offer room for more expansionary policies.”

Prior to 2008, the Seychelle’s overall deficit had reached 9.8 percent and the country was facing “an acute balance of payments” as public debt was predicted to rise a further 20 percent in two years. Ratings agency Standard & Poor – which this week lowered the credit rating of the US for the first time in history – had downgraded the Seychelles to “selective default”.

Several attempts to increase the value of the rupee against the US dollar had been unsuccessful, and did little to address the country’s foreign currency shortage – at the beginning of 2007, the rupee was officially valued at 6 to the US dollar, while the blackmarket exchange rate sat at almost double.

In late 2007 the government of the Seychelles devalued the rupee, setting the official exchange rate to 8 rupees to the US dollar. As in the Maldives following the government’s effective devaluation of the rufiyaa from 12.85 to 15.42 to the US dollar via a ‘managed’ float, the blackmarket in the Seychelles simply adjusted for the increase, settling at 13-14 rupees to the dollar.

In November 2008, the government of the Seychelles dropped its peg and floated the rupee against the US dollar. The rupee immediately leapt to almost 18, and remained substantially volatile for much of the next year. By late 2009 it had plunged to 10 rupees against the dollar, and a year later had settled around 12, where it remains.

Despite several concerns about the lack of diversification of the economy and the impact of piracy – the Seychelles coastguard rescued 27 hostages in March last year after firing 10,000 12.7mm rounds at the engine of the pirate vessel – the IMF describes the outlook for the Seychelles as favourable and predicts medium term growth of five percent as the country’s tourism industry expands and promotes itself outside traditional markets.

“The Seychelles’s stabilisation success offers perspectives for a less painful path toward fiscal sustainability, but caution is needed to maintain external stability and growth prospects,” the IMF noted.

Likes(0)Dislikes(0)

President claims tax reforms key to addressing national rich-poor divide

President Mohamed Nasheed has claimed tax reforms submitted to parliament last week will let the government bridge the gap between rich and poor in the Maldives, by boosting state income and funding government services.

Speaking yesterday during his weekly radio address, Nasheed referred to a household income and expenditure survey for 2009-2010 he claimed indicated that while 10 percent of the population were spending on average just Rf12 a day, the wealthiest 10 percent had daily outgoings of Rf230.

At present, the president said that four tax bills were awaiting approval in parliament in the form of a Goods and Service Tax Bill, Business Profit Tax Bill, Income Tax Bill and an Amendment Bill to Tax Administration Act that were key parts of trying to provide more equality between the country’s rich and poor.

The government’s proposals to try and boost direct revenue through additional taxation have been met with caution and concern by business groups that fear the president could harm business with economic reforms that needed a gradual introduction. Opposition parliamentarians from parties like the Dhivehi Rayyithunge Party (DRP) and the People’s Alliance (PA) have hit out at the government’s taxation policies claiming they were serving only to stifle development that was needed to boost national income.

According to Nasheed, the proposed legislation relates to replacing current systems of indirect tax such as import duties that affect richer and poorer citizens equally with a system that puts more emphasis on the country’s highest earners.  “[This will change the current] indirect tax on the value of goods to a tax payable by the wealthy, based on the profit of their businesses,” the president stated.

If the government is able to succeed in boosting direct income, measures such as the tax reform would be put into social security and protection measures, the president said.

Nasheed claimed that survey also indicated increased quality of living standards for Maldivians.  The number of people living below the poverty line – defined as earning under Rf23 a day – fell by about 50 percent from figures conducted seven years ago, according to the report.

Despite Nasheed’s optimism, DRP leader Ahmed Thasmeen Ali said last month that the country’s economic reforms – such as plans to devalue the rufiya – would remain a key concern for the DRP during the current parliamentary sitting.

“The government has indicated that it will release proposals to address economic concerns and bring down the dollar rate,” he said. “We do accept the fact that revenue has to be increased, but we would like to see serious attempts to reduce state expenditure and ensure revenue is not being wasted.”

The DRP leader claimed that the party was not specifically calling on the government to slash spending in a single area such as political appointees, but instead asking for a consensus on areas such as in the funding of new offices for local councils formed during local elections held in February.

Similarly, Ahmed Nazim, a PA MP and a member of the Majlis’ Public Finance Committee, said that he believed current government policy was ultimately stifling economic development, with administrative costs within the civil service identified as a notable problem.

“We have small percentage [of funds] to invest in the economy. We cannot move finances to a higher level though as the government doesn’t have the right policies to do this,” he claimed. “For instance, we need to reduce the number of [inhabited] islands by linking them and cutting the overall number of cost centres required for decentralisation.

The comments were made as the IMF claimed that the Maldives economy remained “unsustainable” even after cuts made to the annual 2011 budget, as it concluded its Article IV consultation earlier during the year.

Outside of the Majlis’ floor, business organisations like the Maldives National Chamber of Commerce and Industry (MNCCI) have claimed that further investment was needed to strengthen the business sector before taking on widespread economic and taxation reforms.

MNCCI Treasurer Ahmed Adheeb Abdul Gafoor told Minivan News early last month that he believed that with the planned introduction of the additional GST on general trade and corporate tax, the prospect of policies like a minimum wage would need to be studied in terms of possible impact, particularly in the private sector.

“Introducing these tax reforms and schemes like the minimum wage will be difficult over the next two years. The Maldives is at a disadvantage when it comes to economies of scale as it is,” he said. “What I would like to see is a transitional period rather than introducing these measures straight away.”

Adheeb claimed the government needed more consultation with employers – especially in smaller and medium enterprises – before putting any initiatives like a minimum wage in place, adding that private enterprises had been a key component in the more successful developments of the Maldivian economy.

“We [the private sector] could end up losing some of our competitive edge over other countries. What we need is some breathing space and for these reforms to be bought in gradually,” he said. “We have to build confidence in the economy especially with small and medium businesses. If the minimum wage is going to be introduced it should be set on an economic basis and not for short-term political benefit.”

While sharing the MNCCI’s caution, Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI), said this month that he believed that Maldivian businesses should not feel threatened by a shift towards a liberalised economy despite significant changes proposed to tax and regulation.

Janah claimed that government-proposed economic reforms were no different t changes that had already occurred across the western world and parts of South Asia.

Although welcoming market liberalisation in general, the MACI president said he believed that industry would still likely require more time to adapt to the transitions such as a minimum wage and greater taxation on goods and services.

“We are in something of a transition period right now, but what we want businessmen to understand is that they should not feel threatened [by these changes],” he said. “We are being pushed towards a more liberal economic system where we will need more accountability and transparency.”

Janah claimed the proposed changes reflected a potential move away from the style of family-dominated business dealings that he suggested may in some cases be less likely to aim for transparency and detailed accounting.

Likes(0)Dislikes(0)

Limitless money-changing licenses allow resorts to manipulate foreign currency market, says MMA source

Resorts in the Maldives are using their money-changing licenses to operate as defacto banks, creating an artificial demand for dollars that is undermining the government’s efforts to stabilise the economy, an informed source in the Maldives Monetary Authority (MMA), has claimed.

Figures from the country’s central bank show that of the country’s 306 licensed money changers, 95 are resorts while 211 are private.

The present system allows resorts to exchange unlimited amounts of currency, weakening the flow of dollars into the official banking system and allowing resorts to manipulate the market, the source claimed.

“Small resorts are operating like private banks, trading in rufiya and using cheques to do so in any amount of money, with no oversight from the banks or the MMA,” he said.

As a consequence, the government’s recent decision to float the rufiya within 20 percent of the pegged rate of Rf12.85 was unlikely to stabilise the currency until the underlying demand for dollars was addressed.

“The black market rate for the dollar was Rf14-15 before [the government’s decision to devalue the currency]. The reasoning is that now the official rate is Rf15.42, there shouldn’t be a black market. The fact that the black market rate is now Rf16.5 suggests this is not a problem with the economic fundamentals, but a problem of people manipulating the market.”

The source suggested that even if the market was given free reign and the rufiya reached Rf20 to the dollar, “resorts would still have the power to set the parallel market at Rf22.”

The source revealed that during its recent visit to the Maldives, the International Monetary Fund (IMF) had recommended that resort money-changing licenses be limited to changing cash, making it physically impractical to manipulate the market with large sums of money.

The theory, the source explained, was to force resorts to use the local banking system for foreign exchange and increase the flow of dollars through the official economy.

Most resorts presently charge customers in dollars (mostly via credit cards). With most large resorts banking overseas in financial hubs such as Singapore, beyond a fee taken by a local credit card operator such as Cyprea or the Bank of Maldives, very little of this passes through the Maldivian economy – approximately US$13 for every US$100 spent in the country.

“No other country allows another currency to divide the market,” the source said, noting that resorts earned 80 percent of the country’s foreign exchange.

“The taxis at Colombo airport are not permitted by law to accept US dollars, but here every corner shop does. There is a need for exchange control – our monetary regulation is from the 1980s and fits on a single piece of paper. You can see the problem.”

The MMA recently announced the enforcement of legal tender – rufiya – which will require a foreign currency transaction at the point-of-sale. Were resorts restricted to exchanging money by the physical limits of cash, they would be effectively be obligated to feed dollars into the local banking system, thus increasing the availability of foreign currency and greatly reducing the dollar shortage, the source suggested.

The Seychelles encountered similar problems with its exchange rate in late 2008, the source said, providing an IMF document showing that the country’s official exchange rate of 8 rupees to the dollar in late 2008 competing against a black market exchange rate of almost 14.

Following the Seychelles’ decision to float its currency, the rupee shot up to almost 18 to the dollar, but plunged to 10 a year later before eventually settling at 12.

Were foreign exchange controls passed in parliament and enacted, the Maldives could expect the dollar situation to stabilise “in less than a month”, the source predicted.

“This is why ministers are claiming the rufiya can potentially reach Rf10 – although if that stimulates excessive imports it is not necessarily a good thing.”

Reaction

Local economist in a private consultancy Ahmed Adheeb said the Maldives’ economic situation was as much a problem of over-expenditure and high budget deficit.

“Successive IMF reports have raised real problems with the country’s expenditure,” Adheeb said. “You cannot just blame the resorts for manipulating the market.”

Low confidence in both the rufiya and the local banking system was a major concern, he explained, and forcing businesses into it could have wider ramifications.

“We have to build confidence in the financial system, otherwise we will just see black market banks emerge. Businesses need to be confident that their accounts will be protected and confidential, and that this will not be abused for political reasons,” he said.

“For instance, nowhere does a country’s Auditor General state a bank client’s name and debts in [publicly available] audit reports.”

The limited number of cross-currency transactions in local banks showed there was no confidence in the country’s financial system, Adheeb said, as businesses that banked in rufiya could not be confident of receiving dollars when required.

“The Finance Minister needs to provide reassurance that our banks are protected and regulated, and give confidence to businesses that bank confidentiality will be respected. In a small society like this, we have to listen to the entrepreneurs.”

Secretary General of the Maldives Association of Tourism Industry (MATI), ‘Sim’ Mohamed Ibrahim, said all resorts needed a foreign exchange license, and questioned the practicality of both enforcement and restricting these trades to cash: “Even small resorts trade in high volumes,” he said.

The government has meanwhile submitted five bills on taxation to parliament, part of an IMF-sanctioned economic reform package it hopes will radically boost the country’s earnings in future years.
The four bills include the General Goods and Services Tax Bill, Business Profit Tax Bill, Income Tax Bill, an Amendment Bill to Tax Administration Act and an Amendment Bill to the Maldives Import Export Act.
Likes(0)Dislikes(0)

Tourism business worth US$2.5-3 billion, not US$700 million as thought, says President

The tourism industry in the Maldives is worth three to four times more than previous estimates, President Mohamed Nasheed acknowledged during a press conference this morning with journalists, ministers and industry leaders.

“Previously we had thought tourism receipts for the country were around US$700 million. But since collection of the 3.5 percent Tourism GST it has come to light that the figure is around US$2.5-3 billion,” President Nasheed said.

”I was told that the government’s expenditure was too high, but I told them it was not that the expenditure was high, but that the revenue was too low. There are not many ways we can decrease the expenditure of the government,” Nasheed said.

Nasheed was speaking ahead of parliament’s resuming sessions next week, where the ruling Maldivian Democratic Party (MDP) hope their new voting majority will push through major economic reforms. Most ministers were in attendance, as well as senior industry figures including Jumhoree Party (JP) leader Gasim Ibrahim.

Secretary General of the Maldives Association of Tourism Industry (MATI), Sim Mohamed Ibrahim, suggested the US$2.5 billion figure was optimistic, “as a lot of it is guesstimate.”

“The TGST income is variable depending on season, occupancy and volume of business,” he explained. “If they are projecting the figures from Jan-March for the rest of the year, that is the biggest time of the year and the figure will be very rosy. It may be a few years before we can calculate this accurately.”

Nonetheless, “the government will have a lot more money at its disposal for national development,” Sim predicted.

“I don’t think traders will have any problem paying taxes so long as other charges and levies are lowered. What business needs is predictability – this has been lacking in the past, particularly the calculation of rent and lease periods. They need confidence in the system, and things to be spelt out clearly. I think this is now happening.”

Historically the government had derived most its revenue from import duties, followed by bed taxes on the resorts, President Nasheed explained, both of which ultimately be abolished in favour of a modern tax economy.

One impending change – which was not given a date – was the sale of land for commercial purposes, Nasheed said, with all land, including resort islands, becoming a tradeable commodity.

“Ultimately that is where we have to go. I understand that this not the law right now,” he said.

The Maldives currently does not recognise freehold land, and furthermore lacks a central register of land ownership. Currently land is owned by the government and leased to commercial operators, although these agreements can extend up to 99 years. Resort leases are shorter, but under the current government are extendable to 35-50 years when a certain percentage is paid upfront.

Sim observed that only 20 percent of resorts had invested in the longer leases, “either due to their income [required for the upfront payment] or because the banks aren’t lending.”

“[Land purchase] might be an advantage to the industry, as resort land has always been treated differently,” he said.

“It was briefly introduced in the past but was later revoked. Given the shortage of land in the Maldives, land ownership can be a touchy subject. But now it is possible for the government to reclaim land.”

Nasheed has previously observed that the government’s new financial changes, which include an income tax and a general GST it hopes to approve in parliament, were “perhaps far more radical that introduction of political pluralism in the semi-liberal society that we had.”

Likes(0)Dislikes(0)

Foreign hotel and resort workers concerned over financial changes

Expatriate resort workers have expressed confusion over new regulations restricting monthly remittances to 100 percent of workers’ salaries, which they fear may may leave them unable to take supplementary income, such as tips and service charges, out of the country.

The government has said the decision, published in mid-May in the government gazette, was intended to reduce the amount of money sent overseas by those working in the country illegally, either without a work permit or by taking jobs ‘on the side’.

Workers exceeding the limit, and organisations providing the transfer facility, would face a fine.

However, in many of the country’s resorts, service charges and ‘unofficial’ tips can amount to up to 70 percent of a worker’s total income.

“If the transfers are limited to salaries then the tips and service charges will be considered illegal money,” one foreign worker, a guest relations officer (GRO), told Minivan News. “For me that is 75 percent of my income.”

The GRO added that due to the isolation of some resort properties, workers would be unable to reach a bank every month to send their income home.

“There is one ferry a week [to an island with a bank], but not my home branch. To go to Male’ the flight costs US$200 – I can’t transfer money every month, and I can’t spend all my money in the Maldives,” she said.

A lack of information outside local media reports in Dhivehi meant that many foreign staff were in the dark over the pending changes.

“Nobody is sure what is going on. This [lack of confidence] may encourage people to take their money out of the system altogether,” she predicted.

Several foreign workers Minivan News spoke to at a hotel near Male’ also expressed confusion and frustration over what they feared could be a financial impracticality to continuing to work in the Maldives. They noted that the hotel was to begin paying all staff in rufiya, following the Maldives Monetary Authority (MMA)’s recent announcement that it would enforce transactions in the country’s legal tender.

Minivan News contacted a range of authorities dealing with monetary policy, but was unable to get a clear indication of what the regulations would mean for foreign workers.

State Minister for Finance Ahmed Assad and Minister for Economic Development Mahmoud Razee both said they were not in a position to clarify the matter and referred Minivan News to the MMA.

Assad suggested that while the Ministry published official notices in Dhivehi, employers had a duty to keep their foreign employees informed of the implications of any changes to policy.

Assistant Manager of the MMA’s Monetary Policy and Research Division, Ibrahim Ameer, told Minivan News that he understood the regulations were currently pending with the Ministry of Human Resources and that income from resort workers would be taken into consideration, however he noted claims in media reports on the regulation that only basic salaries could be remitted.

A spokesperson for the Ministry of Human Resources meanwhile referred Minivan News to Deputy Minister Hussain Ismail, who was not responding at time of press.

Head of the Tourism Employee Association of the Maldives (TEAM) and Maldivian Democratic Party (MDP) MP Ahmed Easa told Minivan News that the organisation had met with the MMA when the regulations were being drafted and that he understood workers would be able to send their full incomes overseas on presentation of their work visa to the bank.

“The idea is to stop illegal workers from remitting money,” he said. “I think it is tied to income rather than salary, as long as the proper documents are provided. It should not be a problem so long as workers have a work permit. That’s what I have been told, and I haven’t received any complaints yet.”

However, earlier reports on the regulation have suggested it would encompass not just illegal workers, but those taking on ‘unofficial’ extra work – a common practice for many of Male’s expatriate workers, some of whom are paid as little as US$70 a month for full-time construction work. In many cases, this is despite reported promises of salaries of up to US$400 by unscrupulous employment brokers, who charge poor and illiterate people in countries such as Bangladesh fees of between US$3000-4000 to come and work in the Maldives.

The dollar crisis in the Maldives has brought to the fore the remitting of salaries by expatriate workers.  In a recent report, Ameer from the MMA noted that “each expatriate worker will on average remit US$100 per month to their countries. That is US$8 million per month and US$96 million a year. This is an amount that can and should be mitigated.”

Easa told Minivan News that the Human Resources Ministry, “to be honest, has nothing to explain. The Maldives can’t afford this, and we have to have rules to stop the existing open environment.”

The Immigration Department meanwhile reported that the number of expatriates in the country would reach 100,000 by June, after increasing by 10,000 in just three months. The report came as the Ministry of Human Resources published regulation permitting the recruitment of domestic servants without a quota.

The payment of salaries to foreign workers in rufiya is also a concern raised by foreign workers, concerned at their inability to convert the local currency to dollars.

“It may be difficult at this time, but the MMA is reinforcing a law from the early 1980s,” Easa noted. “All these years the MMA has not enforced the law. Right now we have a shortage of foreign exchange, and [expatriates] might face difficultly for a couple of months. But the country doesn’t have a choice.”

TEAM’s Vice President Mauroof Zakir acknowledged receiving concerns from resort workers regarding payment in rufiya.

“We received complaints where workers wanted salary in dollars in instances where the business is earning dollars,” he said, adding that this was already the case for many executive staff who had money paid into accounts outside the Maldives.

Furthermore, Zakir noted complaints from staff who’s wages were now being paid at a rate of Rf 10.42 to the dollar – the minimum rate following the government’s float of the rufiya within a 20 percent band of a pegged Rf12.85 – despite bank rates sitting at Rf 15.42.

“They don’t know the rate at which management is getting dollars,” he said. “I think it is a big concern that the government is not doing anything to raise awareness [for expatriate workers], apart from releasing statements to local media in Dhivehi.”

During a recent interview with Finance Minister Ahmed Inaz, Minivan News questioned the enforcement of rufiya at a time when there was doubt as to whether this could be exchanged into dollars, and the impact this would have on confidence in the Maldivian economy.

“We believe the market is currently unstable because of the changes we have brought, and that these changes will take three months for the various variables to work,” Inaz acknowledged.

“There will be a lot of low confidence and instability, and that will not only be felt by the expatriates. All our imports and consumables, medicine, education – is imported. But we are confident we can get through this.”

Likes(0)Dislikes(0)