Only 65 percent of the foreign currency that enters the Maldives currently flows into the formal banking system, Maldives Monetary Authority (MMA) Governor Ahmed Munawar has said, adding that the MMA's goal is to bring every dollar entering the country into the banking system.
Speaking at the People's Majlis Budget Committee, the governor said the changes the MMA has brought to the foreign exchange regulation include important measures to strengthen the exchange of foreign currency and the deposit of incoming foreign currency into the banking system.
He said there had previously been challenges in monitoring whether foreign currency entering the country reached the banking system, and that the MMA's efforts to bring every incoming dollar into the system will be tightened further next year. As part of this, resorts and businesses have been instructed to maintain a dedicated account for depositing their revenue, which will be closely monitored, he said.
Responding to a question from a member, the governor said the tourism sector earns USD 5.9 billion a year, of which only USD 3.8 billion enters the banking system. If every dollar the country receives entered the system, it would be enough to meet the public's needs, he said.
Citing figures from the Maldives Inland Revenue Authority (MIRA), the governor said only around 50 of the 185 resorts pay income tax, noting that it needs to be looked into whether this is because they are not making a profit or because of some other issue.
Although next year's total budget is smaller than this year's, the governor said there are concerns as the budget deficit is widening and debt is increasing. He said the MMA has advised the government to seek external financing rather than borrowing from the domestic market to finance the budget.
The governor also said this year's GDP growth forecast had to be revised down because the global economic situation and ongoing wars have affected tourism, construction, transport and essential goods. However, he said the economy is expected to grow next year as connectivity expands and the state steps up its marketing campaigns.
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