Former President and MDP Chairperson Mohamed Nasheed has warned that a policy requiring resorts to surrender 40 per cent of their dollar earnings to the Maldives Monetary Authority (MMA) could cause significant damage to the economy.

MMA Governor Ahmed Munawwar announced yesterday that the government plans to increase the current dollar surrender requirement for resorts from 20 per cent to 40 per cent and reduce the period for surrendering the funds from three days to one day.

Nasheed said many resorts have significant foreign-currency debts and rely on foreign investment and bank financing. He warned that increasing the requirement could reduce investor confidence and undermine long-term investment in the tourism sector.

The Governor said the MMA plans to introduce three measures to increase the amount of foreign currency entering the formal financial system. These include raising the surrender requirement to 40 per cent, reducing the surrender period from three days to one day, and monitoring how businesses earning dollars use their foreign currency.

Munawwar said some dollar-earning businesses are selling foreign currency on the black market. He added that increasing the surrender requirement would allow the MMA to release more dollars to banks, which could in turn increase the amount of dollars available to the tourism sector.

The Maldives Association of Tourism Industry (MATI) has also expressed concern over the proposed increase, saying a 40 per cent surrender requirement would place a significant burden on resorts.