MATATO's call to action: Addressing dollar shortages
In their statement, MATATO called on the Government to resolve the ongoing dollar issues as it has started adversely affecting businesses.
In recent years, the Maldives has encountered significant challenges concerning its access to US dollars, a pivotal currency for its economy. The origins of these issues are multifaceted, but they have become notably pronounced against the backdrop of the COVID-19 pandemic. While the exact inception of these dollar shortages is difficult to pinpoint, their emergence can be loosely associated with the onset of pandemic-induced disruptions.
The Maldives with its tourism-driven economy, heavily relies on foreign currency reserves, particularly US dollars, to sustain various sectors vital for its economic stability. However, the pandemic and mismanagement of finances by the Government brought unprecedented disruptions which consequently led to the country having a major US dollar issue. The resultant decrease in dollar inflows exacerbated pre-existing vulnerabilities in the country's financial system.
Although this issue has been persistent for the past few years, leading to the Bank of Maldives (BML) imposing a dollar limit in order to resolve the issue, it appears that no real changes have been implemented in order to address the root cause of the issue. Although the bank stated that the original dollar shortage in the economy was a direct impact of the COVID-19 pandemic which saw the tourism industry come to a stand-still, even three years after the pandemic, citizens of the Maldives are still facing the dollar limit restriction on their cards. T
This means that foreign purchases are extremely limited for individuals who do not own a credit card - even then the dollar limit is set at USD 1,500. Although by instituting such restrictions, the authorities were seeking to mitigate the strain on available dollar reserves and stabilize the financial landscape amidst ongoing economic uncertainties, with no real change thus far, the Maldives Association of Travel Agents and Tour Operators (MATATO) has released a statement, condemning the Government on the lack of real measures being taken to resolve this issue.
In their statement, MATATO called on the Government to resolve the ongoing dollar issues as it has started adversely affecting businesses.
“One of the reasons why the dollar issue has escalated is the lack of foreign currency in banks. That is why banks are issuing that amount of money to businesses in the form of bonds. To address this issue, significant changes in fiscal policies are required”
In addition to this, MATATO also criticized the central bank, Maldives Monetary Authority (MMA) for their lack of effort in resolving the issue with dollars that the country has been facing for the past few years. While the dollar issue started impacting people following the imposing of the USD 250 limit, the mismanagement of funds by the Government and lack of real measures to recover from this situation has led to the dollar price in the black market skyrocketing.
On top of the dollar issue affecting people as well as businesses in general, the country is also due to address the major financial difficulties it has been facing for the past few years.
