Chapter

MALDIVES

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Maldives is the Maldivian rufiyaa.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe exchange rate is determined on the basis of a trade-weighted basket of currencies. Once the exchange rate is set, the Maldives Monetary Authority (MMA) buys and sells currency at a spread of 10 laari within which commercial banks and foreign exchange dealers must also operate. To promote stability and maintain confidence, the authorities have de facto kept the exchange rate stable vis-à-vis the dollar since October 1994.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsThe MMA sells foreign exchange to trading firms and individuals through the Post Office Exchange Counter (POEC). The POEC imposes daily limits for cash and noncash transactions of $300 and $2,000, respectively.
Payment arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with UN sanctionsImports from Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro) are prohibited.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)Transactions in gold are not subject to regulation.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedNo distinction is made between accounts held by residents and those held by nonresidents.
Domestic currency accountsNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImport operations may only be conducted after being registered and licensed at the Ministry of Trade and Industries (MTI). Imports from Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro) are prohibited.
Open general licensesAll goods may be imported under an OGL system. Licenses are issued on application.
Licenses with quotasAll private sector imports of rice, wheat flour, and sugar are subject to a quota.
Import taxes and/or tariffsDuties are levied on all merchandise items other than rice, flour, and sugar.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are issued by the MTI. The private sector may export most items, with the exception of fresh and frozen tuna.
With quotasQuotas for exports of aquarium fish are in effect.
Export taxesExports of fish and fish products and reexports are exempt from duties. However, a 50% tax is levied on the export of ambergris.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsAlthough no law prohibits these purchases, there is a control on the foreign purchase of shares placed by some companies that have floated their securities.
Sale or issue locally by nonresidentsThe law permits raising of capital through public offering.
Controls on derivatives and other instrumentsn.a.
Controls on credit operations
Financial credits
By residents to nonresidentsExcept commercial banks, natural and juridical persons may not extend credit and charge interest without the approval of the MMA. However, locally incorporated offshore banks are allowed to extend financial credits to nonresidents.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Inward direct investmentInvestments require prior approval from the government. Investors are required to provide at least 75% of their capital investment in cash or goods financed from outside Maldives.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital movements
Loans
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Transfer of gambling and prize earningsGambling is not allowed in Maldives.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)Banks may lend 25% of the initial capital investment made by them.
Differential treatment of deposit accounts in foreign exchange
Interest rate controlsInterest rate control exists in the case of local currency only, as the annual rate of interest chargeable on loans and advances may not exceed 20%.
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidents
Credit controlsYes.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidents and on portfolio invested abroadn.r.
Other controls imposed by securities lawsNo.
Changes During 1999
No significant changes occurred in the exchange and trade system.

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