Maldives’ central bank, Maldives Monetary Authority (MMA) has sanctioned dollar allocation to local banks by another 10 percent to facilitate more support for local businesses.
The change will take effect from this week, the MMA said in a statement which will enable banks to increase the proportion of dollars facilitated to small and medium enterprises to 40 percent.
In June, MMA revised its policy, to mandate local banks’ foreign exchange requirement from the previous 60 percent to 90 percent. MMA utilises 60 percent of the proceeds for various government foreign currency obligations and to increase foreign reserves.
However, according to the MMA, with the recent change, it has been selling the extra 30 percent back to the banks every week. The portion has been designated for specific purposes, including essential public needs, food imports and to provide foreign exchange assistance to small and medium enterprises, MMA said.
The primary aim of the change is to ensure that banks can facilitate the foreign exchange requirements of local businesses through weekly foreign exchange sales in a more robust and equitable system.
Under the Foreign Exchange Act, with the amendment to the Foreign Exchange Regulations, the proportion of dollars sold through banks to small and medium enterprises is now at 30 percent which the central bank aims to take up to 50 percent.
The Foreign Exchange Act, which requires tourism establishments to exchange or deposit their US dollar revenue to local banks, came into effect on 1 January this year. Since the introduction of the Foreign Exchange Act, USD 364 million has been deposited with banks as of June this year.
This year, USD 174 million has been utilised for debt repayment, marking a 51 percent increase compared to the same period last year.