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MDP Chairperson, and former president Mohamed Nasheed -- Photo: MDP

Male’: The Maldivian Democratic Party (MDP) has raised concerns over the country’s foreign exchange shortage, warning that low reserves, limited access to US dollars and recent economic measures could further strain businesses and the wider economy.

In a statement issued Today, the MDP said businesses, including small enterprises, contractors, importers and resorts, were being affected by difficulties accessing foreign currency and that investor confidence was also at risk.

The party pointed to the Maldives’ recent debt repayments, including the US$400 million Reserve Bank of India currency swap and US$500 million Sukuk settled in April. The government also completed repayment of the final US$50 million installment of its US$150 million SBI Treasury Bill facility on Today.

The MDP cited the World Bank’s April reserve figure of US$717.9 million, equivalent to about 1.4 months of imports, after the April debt repayments. The World Bank has separately said usable reserves remained below one month of imports, highlighting continued external liquidity pressures.

Foreign exchange measures criticised

The party criticised the government’s requirement for resorts to convert 40 percent of their foreign currency earnings through the domestic banking system, arguing that the measure could affect investor confidence and the tourism sector. The MDP had previously opposed the increase from 20 percent to 40 percent.

The MDP also criticised the government’s management of the exchange rate and claimed that businesses were facing delays in obtaining foreign currency for payments and transfers. It said the shortage was affecting both companies and households, including people making overseas payments for education, medical treatment and other expenses.

The party called for economic and fiscal reforms, arguing that restrictions and penalties alone would not resolve the foreign exchange shortage. Its statement also warned that continued pressure on foreign currency availability could affect the supply and cost of essential imports, including food, fuel and medicine. The government, however, has said arrangements are in place to maintain essential imports following the latest debt repayment.