The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

19MaldivesThe Struggle for New Hope in a Garland of Palm-Clad Islands

Aishath Muneeza

Deputy Minister, Ministry of Islamic Affairs, Maldives

Maldives is a small island nation with a population of about 300,000. The people of Maldives have their own language and culture and follow one religion, Islam. The currency is the rufiyaa, and the value of it is pegged against the U.S. dollar. Maldives is famous for its natural beauty, and tourism is the “golden goose” of its economy; fishing, as the second largest economic sector, is considered the lifeline of the nation.

Maldives has unique geographical features, comprising thousands of isolated islands scattered over the Indian Ocean, resembling a garland or pearls. The underwater beauty and the white sandy beaches attract tourists, making tourism a substantive part of the GDP of the country. Since the country has limited natural resources, Maldives depends heavily on imported goods. As such, the economy of Maldives can be described as small and extensively dependent on income from tourism and foreign trade. The economy is often viewed as very limited and with minimal diversity, and the banking industry contributes exponentially.

The central bank of the country is the Maldives Monetary Authority. There are seven banks operating in the country, and only one, the Maldives Islamic Bank, is a full-fledged Islamic bank. There are four insurance companies, but only one offers takaful services, and there are two nonbanking financial institutions. ...