Front Matter

Front Matter

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2003
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    © 2003 International Monetary Fund

    Library of Congress CataloginginPublication Data

    International Monetary Fund.

    Annual report on exchange arrangements and exchange restrictions. 1979—

    Continues: International Monetary Fund. Annual Report on exchange restrictions, 1950–1978

    1. Foreign exchange — Law and Legislation—Periodicals 2. Foreign

    exchange — Control — Periodicals. 1. Title

    K4440.A 13 157 [date] 341.7’51 79-644506

    ISSN 02507366

    ISBN 9781589062184

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    Letter of Transmittal to Members and Governors of the Fund

    August 29, 2003

    Dear Sir or Madam:

    I have the honor of transmitting to you a copy of the International Monetary Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions, 2003 which has been prepared in accordance with the provisions of Article XIV, Section 3 of the Articles of Agreement.

    On behalf of the Executive Board. I would like to express our appreciation to the countries for their cooperation in the preparation of the Report.

    Sincerely yours

    Horst Kohler

    Chairman of the Executive Board

    and Managing Director

    Contents

    Note: The term “country,” as used in this publication, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states but for which statistical data are maintained and provided internationally on a separate and independent basis.

    PREFACE

    The Annual Report on Exchange Arrangements and Exchange Restrictions has been published by the IMF since 1950. It draws on information available to the IMF from a number of sources, including that provided in the course of official staff visits to member countries, and has been prepared in close consultation with national authorities. The information is presented in a tabular format.

    This project was coordinated in the Monetary and Financial Systems Department by a staff team directed by Shogo Ishii and comprising Kyung-Mo Huh, Virgilio A. Sandoval, and Harald Anderson. It draws on the specialized contribution of that department (for specific countries), with assistance from staff members of the IMF’s six departments, together with staff of other departments. The report was edited by Gail Berre, Helen Chin, and Esha Ray of the External Relations Department and was produced by Mrs. Ramiscal and the IMF Multimedia Services Division.

    DEFINITION OF ACRONYMS

    ACP

    Atlantic, Caribbean, and Pacific countries

    ACU

    Asian Clearing Union (integrated by Bangladesh, Bhutan, India, Islamic Republic of Iran, Myanmar, Nepal, Pakistan. and Sri Lanka)

    AFTA

    ASEAN free trade area (see ASEAN, below)

    AMU

    Asian monetary unit

    ANZCERTA

    Australia-New Zealand Closer Economic Relations and Trade Agreement

    ASEAN

    Association of Southeast Asian Nations (integrated by Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand)

    ATC

    Agreement of Textiles and Clothing

    BCEAO

    Central Bank of West African States; the West African states are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau. Mali, Niger, Senegal, and Togo

    BEAC

    Bank of Central African States; the Central African states are Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon

    CACM

    Central American Common Market (integrated by Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua)

    CAEMC

    Central African Economic and Monetary Community (integrated by the members of the BEAC)

    CAP

    Common agricultural policy (of the EU)

    CARICOM

    Caribbean Community and Common Market (integrated by Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago). The Bahamas is also a member of CARICOM, but it does not participate in the Common Market.

    CEEAC

    Economic Community of Central African States (integrated by Angola, Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of the Congo, Republic of Congo. Equatorial Guinea, Gabon, Rwanda, and São Tomé and Príncipe)

    CEFTA

    Central European Free Trade Area (integrated by Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovak Republic, and Slovenia)

    CEPGL

    Economic Community of the Great Lakes Countries (integrated by Burundi, Democratic Republic of the Congo, and Rwanda)

    CEPT

    Common effective preferential tariff of the ASEAN free trade zone

    CET

    Common external tariff

    CFA

    Commùnauté financière d’Afrique (administered by the BCEAD) and Coopération financière en Afrique centrale (administered by the BEAC)

    CIS

    Commonwealth of Independent States (integrated by Armenia, Azerbaijan, Belarus. Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan)

    CMA

    Common Monetary Area (a single exchange control territory comprising Lesotho, Namibia, South Africa, and Swaziland)

    CMCF

    Caribbean Multilateral Clearing Facility

    CMEA

    Council for Mutual Economic Assistance (dissolved; formerly integrated by Bulgaria, Cuba. Czechoslovakia, Hungary. Mongolia, Poland, Romania, the U.S.S.R., and Vietnam)

    COMESA

    Common Market for Eastern and Southern Africa (integrated by Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe)

    EAC

    East African Community

    ECB

    European Central Bank

    ECCB

    Eastern Caribbean Central Bank (Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis. St. Lucia, and St. Vincent and the Grenadines)

    ECCU

    Eastern Caribbean Currency Union

    ECOWAS

    Economic Community of West African States (integrated by Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo)

    ECSC

    European Coal and Steel Community

    EEA

    European economic area

    EFTA

    European Free Trade Association (integrated by Iceland, Liechtenstein, Norway, and Switzerland)

    EMU

    European Economic and Monetary Union

    ERM

    Exchange rate mechanism (of the EMS)

    EU

    European Union (formerly European Community; integrated by Austria. Belgium, Denmark. Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and United Kingdom)

    FATF

    Financial Action Task Force on Money Laundering (of the OECD; integrated by Argentina; Australia; Austria; Belgium; Brazil; Canada; Denmark; European Commission; Finland; France; Germany; Greece; the GCC; China, Hong Kong SAR; Iceland; Ireland; Italy; Japan; Luxembourg; Mexico; Netherlands; New Zealand; Norway; Portugal; Singapore: Spain; Sweden; Switzerland; Turkey; United Kingdom; and United States).

    FSU

    Former Soviet Union

    GCC

    Gulf Cooperation Council (Cooperation Council for the Arab States of the Gulf; integrated by the Kingdom of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates)

    GSP

    Generalized system of preferences

    IOSCO

    International Organization of Securities Commissions

    LAIA

    Latin American Integration Association (integrated by Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and República Bolivariana de Venezuela)

    LC

    Letter of credit

    LIBOR

    London interbank offered rate

    MERCOSUR

    Southern Cone Common Market (integrated by Argentina, Brazil, Paraguay, and Uruguay)

    MFA

    Multifiber Arrangement

    MFN

    Most-favored nation

    MOF

    Ministry of Finance

    NAFTA

    North American Free Trade Agreement

    OECD

    Organization for Economic Cooperation and Development (integrated by Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy. Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States)

    OECS

    Organization of Eastern Caribbean States (integrated by Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines)

    OGL

    Open general license

    PACER

    Pacific Agreement on Closer Economic Relations (of the Pacific Islands Forum; integrated by Australia, Cook Islands. Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu)

    PARTA

    Pacific Regional Trade Agreement (of the Pacific Islands Forum)

    PICTA

    Pacific Island Countries Trade Agreement (of the Pacific islands Forum; integrated by Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu)

    RCPSFM

    Regional Council on Public Savings and Financial Markets (an institution of WAEMU countries that is involved in the authorization for issuance and marketing of securities)

    RIFF

    Regional Integration Facilitation Forum (formerly the Cross-Border Initiative; integrated by Burundi, Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Swaziland, Tanzania, Uganda, Zambia.. and Zimbabwe)

    SACU

    Southern African Customs Union (integrated by Botswana, Lesotho, Namibia, South Africa, and Swaziland)

    SADC

    Southern Africa Development Community (integrated by Angola. Botswana, Democratic Republic of the Congo. Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe)

    SDR

    Special drawing rights

    SPARTECA

    South Pacific Regional Trade and Economic Cooperation Agreement (signed by Australia, Cook Islands, Fiji. Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu)

    UCAC

    Central African Units of Accounts

    UDEAC

    Central African Customs and Economic Union (integrated by Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon)

    UN

    United Nations

    UNITA

    National Union for the Total Independence of Angola

    VAT

    Value-added tax

    WAEMU

    West African Economic and Monetary Union (formerly WAMU; integrated by the members of the BCEAO)

    WAMA

    West African Monetary Agency (formerly WACII)

    WTO

    World Trade Organization

    Note: This list does not include acronyms of purely national institutions mentioned in the country chapters.

    INTRODUCTION

    The report provides a detailed description of the exchange arrangements and exchange/trade restrictions of individual IMF member countries and Hong Kong SAR, as well as Aruba and the Netherlands Antilles, for which the Kingdom of the Netherlands has accepted the IMF Articles of Agreement. In general, the description relates to the exchange and trade systems as of the end of 2002, but, in appropriate cases, reference is made to significant developments that took place in early 2003.

    The description of the exchange and trade system is not necessarily confined to those aspects involving exchange restrictions or exchange controls. As in previous reports, questions of definition and jurisdiction have not been raised, and an attempt has been made to describe exchange and trade systems in their entirety, except for the tariff structure and, in most cases, direct taxes on imports and exports.

    Following a standardized approach, the description of each system is broken down into similar headings, and the coverage for each country includes a final section that lists chronologically the more significant changes during 2002 and early 2003.

    The report is presented in a tabular format that enhances transparency and the uniformity of treatment of the information across countries and includes coverage on the Regulatory frame work for capital transactions. The information is drawn from the exchange arrangements and exchange restrictions database maintained by the IMF. The country chapters present an abstract of the relevant information that is available to the IMF. The report also includes the official IMF classification table on Exchange Rate Arrangements and Anchors of Monetary Policy. This classification system is based on the information available on the operations of members’ de facto policies, as analyzed by IMF staff, which may differ from countries’ officially announced arrangements. The table on Summary Features of Exchange Arrangements and Regulatory Frameworks for Current and Capital Transactions in Member Countries provides an overview of the characteristics of the exchange and trade systems of IMF member countries. The Country Table Matrix (the Appendix) provides a complete listing of the rubrics used in the database.

    When it is unclear whether a particular category or measure exists, because pertinent information is not available at the time of publication, the category is displayed with the notation “n.a.” If a measure is known to exist but specific information on it is not available, the category is displayed with the notation “yes.” When information is available on all but a particular item or items within a category, these items are not included in the table. In cases where members have provided the IMF with the information that a category or an item is not regulated, these are marked by “n.r.”

    COMPILATION GUIDE

    Status Under IMF Articles of Agreement.
    Article VIIIThe member country has accepted the obligations of Article VIM, Sections 2, 3, and 4 of the IMF’s Articles of Agreement.
    Article XIVThe member country continues to avail itself of the transitional arrangements of Article XIV, Section 2.
    Exchange Arrangement.
    CurrencyThe official legal tender of the country.
    Other legal tenderThe existence of another currency that is allowed to be used officially in the country.
    Exchange rate structureIf there is one exchange rate, the system is called unitary; if there are more than one exchange rates that may be used simultaneously for different purposes and/or by different entities, the system is called dual or multiple. Different effective exchange rates resulting from exchange taxes or subsidies are not included in this category.
    Classification
    Exchange arrangement with no separate legal tenderThe currency of another country circulates as the sole legal tender (formal dollarization), or the member belongs to a monetary or currency union in which the same legal tender is shared by the members of the union. Adopting such regimes is a form of surrendering the monetary authorities’ independent control over domestic monetary policy.
    Currency board arrangementA monetary regime based on an explicit legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate, combined with restrictions on the issuing authority to ensure the fulfillment of its legal obligation. This implies that domestic currency may be issued only against foreign exchange and that it must remain fully backed by foreign assets, thus eliminating traditional central bank functions, such as monetary control and the role of lender-of-last-resort. This leaves little scope for discretionary monetary policy, although some flexibility may still be afforded, depending on how strict the rules of the boards are.
    Conventional pegged arrangementThe country pegs its currency (formally or de facto) at a fixed rate to another currency or a basket of currencies, where the basket is formed from the currencies of major trading or financial partners and weights reflect the geographical distribution of trade, services, or capital flows. The currency composites may also be standardized, such as those of the SDR. There is no commitment to maintain the parity irrevocably. The exchange rate may fluctuate within a narrow margin of less than ± 1 % around a central rate, or the maximum and minimum values of the exchange rate may remain within a narrow margin of 2% for at least three months. The monetary authority stands ready to keep the fixed parity through direct intervention (i.e., sale/purchase of foreign exchange in the market) or indirect intervention (e.g., aggressive use of interest rate policy, imposition of foreign exchange regulations or exercise of moral suasion that constrains foreign exchange activity, or intervention by other public institutions). Flexibility of monetary policy, though limited, is greater than in hard pegs because traditional central banking functions are still possible, and the monetary authority can adjust the level of the exchange rate, although relatively infrequently.
    Pegged exchange rate within horizontal bandsThe value of the currency is maintained within certain margins of fluctuation of at least ±1% around a formal or a de facto fixed central rate. This category also includes the arrangements of the countries participating in the exchange rate mechanism (ERM) of the European Monetary System (EMS), which was replaced with ERM II on January 1, 1999. There is a limited degree of monetary policy discretion, which depends on the bandwidth.
    Crawling pegThe currency is adjusted periodically in small increments at a fixed rate or in response to changes in selective quantitative indicators, such as past inflation differentials vis-à-vis major trading partners, differentials between the target inflation and expected inflation in major trading partners, and so forth. The rate of crawl may be set to generate inflation adjusted changes in the currency (backward looking), or set at a preannounced fixed rate and/or below the projected inflation differentials (forward looking). Maintaining a credible crawling peg imposes constraints on monetary policy in a similar manner as a fixed peg system.
    Crawling bandThe value of the currency is maintained within certain fluctuation margins of at least ±1% around a central rate, which is adjusted periodically at a fixed rate or in response to changes in selective quantitative indicators. The degree of flexibility of the exchange rate is a function of the width of the band, with bands chosen to remain either symmetric around a crawling central parity or to widen gradually with an asymmetric choice of the crawl of upper and lower bands (in the latter case, there may not be a preannounced central rate). The commitment to maintain the exchange rate within the band continues to impose constraints on monetary policy, with the degree of policy independence being a function of the bandwidth.
    Managed floating with no preannounced path for the exchange rateThe monetary authority influences exchange rate movements through active intervention to counter the long–term trend of the exchange rate without specifying a predetermined exchange rate path or without having a specific exchange rate target. Indicators for managing the rate are broadly judgmental—balance of payments position, international reserves, parallel market developments—and adjustments may not be automatic. Intervention may be direct or indirect. A distinction is made between “tightly managed floating”—where intervention takes the form of very tight monitoring that generally results in a stable exchange rate without a clear exchange rate path, with the aim of permitting the authorities an extra degree of flexibility in deciding the tactics to achieve a desired path—and “other managed floating,” where the exchange rate is influenced in a more ad hoc fashion.
    Independently floatingThe exchange rate is market determined, with any foreign exchange intervention aimed at moderating the rate of change and preventing undue fluctuations in the exchange rate, rather than at establishing a level for it. In these regimes, monetary policy is, in principle, independent of exchange rate policy.
    Exchange taxForeign exchange transactions are subject to a special tax. Bank commissions charged on foreign exchange transactions are not included in this category; rather, they are listed under the exchange arrangement classification.
    Exchange subsidyForeign exchange transactions are subsidized by using separate, nonmarket exchange rates.
    Forward exchange marketThe existence of a forward exchange market.
    Official cover of forward operationsOfficial coverage of forward operations refers to the case where an official entity (the central bank or the government) assumes the exchange risk of certain foreign exchange transactions.
    Arrangements for Payments and Receipts.
    Prescription of currency requirementsThe official requirements affecting the selection of currency and the method of settlement for transactions with other countries. When a country has concluded payments agreements with other countries, the terms of these agreements often lead to a prescription of currency for specified categories of payments to, and receipts from, the countries concerned. This category includes information on the use of domestic currency in transactions between residents and nonresidents, both domestically and abroad; it also indicates whether there are any restrictions on the use of foreign currency among residents.
    Payments arrangements
    Bilateral payments arrangementsTwo countries conclude an agreement to prescribe specific rules for payments to each other, including cases where private parties are also obligated to use specific currencies. These agreements can be either operative or inoperative.
    Regional arrangementsMore than two parties participate in a payments agreement.
    Clearing agreementsThe official bodies of two or more countries agree to offset with some regularity the balances that arise from payments to each other as a result of the exchange of goods, services, or—less often—capital.
    Barter agreements and open accountsThe official bodies of two or more countries agree to offset exports of goods and services to one country with imports of goods and services from the same country, without payment.
    Administration of controlThe authorities’ division of responsibility for monitoring policy, administering exchange controls, and determining the extent of delegation of powers to outside agencies (often banks are authorized to effect foreign exchange transactions).
    International security restrictionsRestrictions on payments and transfers in connection with international transactions imposed by member countries for reasons of national or international security.
    In accordance with IMF Executive Board Decision No. 144.(52/51)International security restrictions on the basis of IMF Executive Board Decision No, 144(52/51), which establishes the obligation of members to notify the IMF before imposing such restrictions, or, if circumstances preclude advance notification, as promptly as possible.
    In accordance with UN sanctionsSanctions imposed against a second body on the basis of a UN decision.
    Payments arrearsOfficial or private residents of a member default on their payments or transfers in foreign exchange to nonresidents. This category includes only the situation in which domestic currency is available for residents to settle their debts, but they are unable to obtain foreign exchange, for example, because of the presence of an officially announced or unofficial queuing system; it does not cover nonpayment by private parties due to bankruptcy of the party concerned.
    Controls on trade in gold (coins and/or bullion)The existence of separate rules for trading in gold, both domestically and with foreign countries.
    Controls on exports and imports of banknotesThe existence of regulations for the physical movement of means of payment between countries. Where information is available, the category distinguishes between separate limits for the (1) export and import of banknotes by travelers and (2) export and import of banknotes by banks and other authorized financial institutions.
    Resident Accounts.
    Indicates whether resident accounts that are maintained in the national currency or in foreign currency, locally or abroad, are allowed and describes how they are treated and the facilities and limitations attached to such accounts. When there is more than one type of resident account, the nature and operation of the various types of accounts are also described: for example, whether residents are allowed to open foreign exchange accounts with or without approval from the exchange control authority; whether these accounts may be held domestically or abroad; or whether the balances on accounts held by residents in domestic currency may be converted into foreign currency.
    Nonresident Accounts.
    Indicates whether local nonresident accounts maintained in the national currency or in foreign currency are allowed and describes how they are treated and the facilities and limitations attached to such accounts. When there is more than one type of nonresident account, the nature and operation of the various types of accounts are also described.
    Blocked accountsAccounts of nonresidents, usually in domestic currency. Regulations prohibit or limit the conversion and/or transfer of the balances of such accounts.
    Imports and Import Payments.
    Describes the nature and extent of exchange and trade restrictions on imports.
    Foreign exchange budgetInformation on the existence of a foreign exchange plan, i.e., prior allocation of a certain amount of foreign exchange, usually on an annual basis, for the importation of specific types of goods and/or services; in some cases, also differentiating between individual importers.
    Financing requirements for importsInformation on specific import-financing regulations limiting the rights of residents to conclude private contracts in which the financing options differ from the official regulations.
    Documentation requirements for release of foreign exchange for imports
    Domiciliation requirementsThe obligation to domicile the transactions with a specified (usually domestic) financial institution.
    Preshipment inspectionMost often a compulsory government measure aimed at establishing the veracity of the import contract in terms of volume, quality, and price.
    Letters of creditParties are obligated to use letters of credit as a form of payment for their imports.
    Import licenses used as exchange licensesImport licenses are not used for trade purposes but to restrict the availability of foreign exchange for legitimate trade.
    Import licenses and other nontariff measures
    Positive listA list of goods that may be imported.
    Negative listA list of goods that may not be imported.
    Open general licensesIndicates arrangements whereby certain imports or other international transactions are exempt from the restrictive application of licensing requirements.
    Licenses with quotasRefers to cases where a license for the importation of a certain good is granted, but a specific limit is imposed on the amount to be imported.
    Other nontariff measuresMay include prohibitions on imports of certain goods from all countries or of all goods from a certain country. Several other nontariff measures are used by members (e.g., phyto-sanitary examinations, setting of standards, and so forth), but these are not covered fully in the Report.
    Import taxes and/or tariffsA brief description of the import tax/tariff system, including taxes levied on the foreign exchange made available for imports.
    Taxes collected through the exchange systemIndicates if any taxes apply to the exchange side of an import transaction.
    State import monopolyPrivate parties are not allowed to engage in the import of certain products or they are limited in their activity.
    Exports and Export Proceeds.
    Describes restrictions on the use of export proceeds, as well as regulations on exports.
    Repatriation requirementsThe obligation of exporters to repatriate export proceeds.
    Surrender requirementsRegulations requiring the recipient of repatriated export proceeds to sell, sometimes at a specified exchange rate, any foreign exchange proceeds in return for local currency to the central bank, commercial banks, foreign exchange markets, or exchange dealers authorized for this purpose.
    Financing requirementsInformation on specific export-financing regulations limiting the rights of residents to conclude private contracts in which the financing options differ from the official regulations.
    Documentation requirementsThe same categories as in the case of imports are used.
    Export licensesRestrictions on the right of residents to export goods. These restrictions may take the form of quotas (where a certain quantity of shipment abroad is allowed) or the absence of quotas (where the licenses are issued at the discretion of the foreign trade control authority).
    Export taxesA brief description of the export tax system, including any taxes that are levied on the foreign exchange earned by exporters.
    Payments for Invisible Transactions and Current Transfers.
    Describes the procedures for effecting payments abroad in connection with current transactions in invisibles, with reference to prior approval requirements, the existence of quantitative and indicative limits, and/or bona fide tests. Detailed information on the most common categories of transactions is provided only when regulations differ for the various categories. Indicative limits establish maximum amounts up to which the purchase of foreign exchange is allowed upon declaration of the nature of the transaction, mainly for statistical purposes. Amounts above those limits are granted if the bona fide nature of the transaction is established by the presentation of appropriate documentation. Bona fide tests also may be applied to transactions for which quantitative limits have not been established.
    Trade–related paymentsIncludes freight/insurance (including possible regulations on non-trade related insurance payments and transfers); unloading/storage costs; administrative expenses; commissions; and customs duties and fees.
    Investment–related paymentsIncludes profits/dividends; interest payments (including interest on debentures, mortgages, and so forth); amortization of loans or depreciation of foreign direct investments; and payments and transfers of rent.
    Payments for travelIncludes international travel for business, medical treatment, tourism, and so forth.
    Personal paymentsIncludes medical expenditures abroad; study expenses abroad; pensions (including regulations on payments and transfers of pensions by both state and private pension providers on behalf of nonresidents, as well as the transfer of pensions due to residents living abroad); and family maintenance/alimony (including regulations on payments and transfers abroad of family maintenance/alimony by residents).
    Foreign workers’ wagesTransfer abroad of earnings by nonresidents working in the country.
    Credit card use abroadUse of credit and debit cards to pay for invisible transactions.
    Other paymentsIncludes subscription/membership fees, authors’ royalties, consulting/legal fees, and so forth.
    Proceeds from Invisible Transactions and Current Transfers.
    Describes regulations governing exchange receipts derived from transactions in invisibles—including descriptions of any limitations on their conversion into domestic currency—and the use of those receipts.
    Repatriation requirementsThe definitions of repatriation and surrender requirements are similar to those applied to export proceeds.
    Restrictions on use of fundsRefers mainly to the limitations imposed on the use of receipts previously deposited in certain types of bank accounts.
    Capital Transactions.
    Describes regulations influencing both inward and outward capital flows. The concept of controls on capital transactions is interpreted broadly. Thus, controls on capital transactions include prohibitions; need for prior approval, authorization, and notification; dual and multiple exchange rates; discriminatory taxes; and reserve requirements or interest penalties imposed by the authorities that regulate the conclusion or execution of transactions or transfers, or the holding of assets at home by nonresidents and abroad by residents. The coverage of the regulations applies to receipts as well as to payments and to actions initiated by nonresidents and residents. In addition, because of the close association with capital transactions, information is also provided on local financial operations conducted in foreign currency, describing specific regulations in force that limit residents and nonresidents issuing securities denominated in foreign currency or, generally, limitations on contract agreements expressed in foreign exchange.
    Controls on capital and money market instrumentsRefers to public offerings or private placements on primary markets or their listing on secondary markets.
    On capital market securitiesRefers to shares and other securities of a participating nature, and bonds and other securities with an original maturity of more than one year.
    Shares or other securities of a participating natureIncludes transactions involving shares and other securities of a participating nature if they are not effected for the purpose of acquiring a tasting economic interest in the management of the enterprise concerned. Investment for the purpose of acquiring a lasting economic interest is treated under foreign direct investments.
    Bonds or other debt securitiesRefers to bonds and other securities with an original maturity of more than one year. The term “other securities” includes notes and debentures.
    On money market instrumentsRefers to securities with an original maturity of one year or less and includes short-term instruments, such as certificates of deposit and bills of exchange. The category also includes treasury bills and other short-term government paper, banker’s acceptances, commercial papers, interbank deposits, and repurchase agreements.
    On collective investment securitiesIncludes share certificates and registry entries or other evidence of investor interest in an institution for collective investment, such as mutual funds, and unit and investment trusts.
    Controls on derivatives and other instrumentsRefers to operations in other negotiable instruments and nonsecuritized claims not covered under the above subsections. These may include operations in rights; warrants; financial options and futures; secondary market operations in other financial claims (including sovereign loans, mortgage loans, commercial credits, negotiable instruments originating as loans, receivables, and discounted bills of trade); forward operations (including those in foreign exchange); swaps of bonds and other debt securities, credits and loans; and other swaps (interest rate, debt/equity, equity/debt, foreign currency, as well as swaps of any of the instruments listed above). Controls on operations in foreign exchange without any other underlying transaction (on spot or forward trading on the foreign exchange markets, on forward cover operations, and so forth) are also included.
    Controls on credit operations
    Commercial creditsCovers operations directly linked with international trade transactions or with the rendering of international services.
    Financial creditsIncludes credits other than commercial credits granted by all residents, including banks, to nonresidents or vice versa.
    Guarantees, sureties, and financial backup facilitiesIncludes those provided by residents to nonresidents and vice versa. It also includes securities pledged for payment or performance of a contract—such as warrants, performance bonds, and standby letters of credit—and financial backup facilities that are credit facilities used as a guarantee for independent financial operations.
    Controls on direct investmentRefers to investments for the purpose of establishing lasting economic relations both abroad by residents and in the country by nonresidents. These investments are essentially for purposes of producing goods and services, and, in particular, investments that allow investor participation in the management of the enterprise. The category includes the creation or extension of a wholly owned enterprise, subsidiary, or branch and the acquisition of full or partial ownership of a new or existing enterprise that results in effective influence over the operations of the enterprise.
    Controls on liquidation of direct investmentRefers to the transfer of principal, including the initial capital and capital gains, of a foreign direct investment as defined above.
    Controls on real estate transactionsRefers to the acquisition of real estate not associated with direct investment. It includes, for example, investments of a purely financial nature in real estate or the acquisition of real estate for personal use.
    Controls on personal capital transactionsCovers transfers initiated on behalf of private persons and intended to benefit other private persons. It includes transactions involving property to which the promise of a return to the owner with payments of interest is attached (loans, settlements of debt in their country of origin by immigrants), and transfers effected free of charge to the beneficiary (gifts and endowments, loans, inheritances and legacies, and emigrants’ assets).
    Provisions specific to commercial banks and other credit institutionsDescribes regulations that are specific to these institutions, such as monetary, prudential, and foreign exchange controls. Inclusion of an entry in this category does not necessarily signify that the aim of the measure is to control the flow of capital. Some of these items (borrowing abroad, lending to nonresidents, purchase of locally issued securities denominated in foreign exchange, investment regulations) may merely be repetitions of the entries under respective categories of controls on capital and money market instruments, controls on credit operations, or direct investments when the same regulations apply to commercial banks as well as to other residents.
    Open foreign exchange position limitsDescribes regulations on certain commercial bank balance sheet items (including capital) and on limits covering commercial banks’ positions in foreign currencies (including gold).
    Provisions specific to institutional investorsDescribes controls specific to institutions, such as insurance companies and pension funds.
    Other controls imposed by securities lawsRefers to additional regulations on capital transfers imposed by law, such as controls on the listing of foreign securities on local security markets.
    Exchange Rate Arrangements and Anchors of Monetary Policy1, 2
    Exchange RateMonetary Policy Framework
    Regime
    MonetaryInflationIMF-supported or
    (Number ofaggregatetargetingother monetary
    countries)Exchange rate anchortargetframeworkprogramOther
    ExchangeAnotherEuro area4, 5
    arrangementscurrency asCFA franc zoneAustria
    with no separatelegal tenderECCU3WAEMUCAEMCBelgium
    legal tender (40)EcuadorAntigua andBenin*Cameroon*Finland
    El Salvador6BarbudaBurkinaCentralFrance
    KiribatiDominicaFaso*AfricanGermany
    Marshall islandsGrenadaCôteRep.*Greece
    Micronesia, Fed.St. Kitts andd’Ivoire*Chad*Ireland
    States ofNevisGuinea-Congo,Italy
    PalauSt. LuciaBissau*Rep. of*Luxembourg
    PanamaSt. VincentMali*EquatorialNetherlands
    San Marinoand theNiger*GuineaPortugal
    Timor-LesteGrenadinesSenegal*Gabon*Spain
    Togo
    Currency boardBosnia and Herzegovina*
    arrangements (8)Brunei Darussalam
    Bulgaria*
    China—Hong Kong SAR
    Djibouti*
    Estonia*
    Lithuania*
    OtherAgainst a single currency (31)Against a composite (10)China, P.R.
    conventional fixedArubaBotswana7of†8
    peg arrangementsBahamas, The7Fiji
    (42)Bahrain. Kingdom ofKuwait
    BangladeshLatvia
    BarbadosLibya Arab Jamahiriya
    BelizeMalta
    BhutanMorocco
    Cape Verde*Samoa
    China, P.R. of†8Seychelles
    Comoros9Vanuatu
    Eritrea
    Guinea*8
    Jordan*8
    Lebanon*8
    Lesotho*
    Macedonia, FYR8
    Malaysia
    Maldives8
    Namibia
    Nepal
    Netherlands Antilles
    Oman
    Qatar
    Saudi Arabia
    Sudan8
    Suriname7, 8
    Swaziland
    Syrian Arab Rep.7
    Turkmenistan8
    Ukraine8
    United Arab Emirates
    Zimbabwe8
    Pegged exchangeWithin a cooperativeOther bandHungary†
    rates withinarrangement ERM 11 (1)arrangements (4)
    horizontalDenmarkCyprus
    bands (5)10Egypt7
    Hungary†
    Tonga
    Crawling pegs (4)BoliviaTunisia
    Costa Rica8
    Nicaragua*
    Solomon Islands8
    Tunisia8
    Source: IMF staff reports.

    Data are accurate as of December 31, 2002. The following countries were reclassified subsequent to that date: Egypt, Kuwait, Sudan, and República Bolivariana de Venezuela.

    An asterisk (*) indicates that the country has an IMF-supported or other monetary program. A dagger (t) indicates that the country adopts more than one nominal anchor in conducting monetary policy (it should be noted, however, that it would not be possible, for practical reasons, to infer from this table which nominal anchor plays the principal role in conducting monetary policy).

    These countries have a currency board arrangement.

    The country has no explicitly stated nominal anchor, but rather monitors various indicators in conducting monetary policy.

    Until they were withdrawn in the first quarter of 2002, national currencies retained their status as legal tender within their national territories.

    For El Salvador, the printing of new colones, the domestic currency, is prohibited, but the existing stock of colones will continue to circulate along with the U.S. dollar as legal tender until all colon notes wear out physically.

    The member maintains an exchange arrangement involving more than one market. The arrangement shown is that maintained in the major market.

    The regime operating de facto in the country is different from its de jure regime.

    Comoros has the same arrangement with the French Treasury as the CFA franc zone countries.

    The band widths for these countries are Cyprus (±15%), Denmark (±2.25%), Egypt (±3%), Hungary (±15%), and Tonga (±5%).

    The band widths for these countries are Belarus (±5%), Honduras (±7%), Israel (±22%), and Romania and Slovenia (unannounced).

    The Federal Republic of Yugoslavia was renamed Serbia and Montenegro on February 4, 2003.

    Insufficient information on the country is available for classification.

    Exchange RateMonetary Policy Framework
    RegimeMonetaryInflationIMF-supported or
    (Number ofaggregatetargetingother monetary
    countries)Exchange rate anchortargetframeworkprogramOther
    Exchange ratesBelarusSlovenia†8Israel†
    within crawlingHonduras*
    bands (5)11Israel†
    Romania*8
    Slovenia†8
    Managed floatingGambia, The*Czech Rep.ArgentinaAfghanistan,
    with no pre-GhanaThailandAzerbaijanI.S. of
    announced pathGuyana*Cambodia7Algeria4
    for exchangeIndonesia*EthiopiaAngola4
    rate (45)Iran, I.R. ofKenyaBurundi4
    Jamaica8Kyrgyz Rep.Croatia
    MauritiusLao PDR8Dominican Rep.4, 7
    São Tomé andMoldova8Guatemala*4
    Príncipe*MongoliaHaiti4, 8
    PakistanIndia4
    RwandaIraq13
    Serbia andKazakhstan4
    Montenegro12Mauritania
    TajikistanMyanmar4, 7, 8
    VietnamNigeria
    ZambiaParaguay4
    Russian Federation
    Singapore4
    Slovak Rep.4
    Trinidad and Tobago
    IndependentlyMalawi*AustraliaAlbaniaJapan4
    floating (37)SierraBrazil*ArmeniaLiberia4
    Leone*CanadaCongo, DemPapua New Guinea4
    Sri LankaChile7Rep. ofSomalia7, 13
    UruguayColombiaGeorgiaSwitzerland4
    Venezuela,IcelandMadagascarUnited States4
    Rep.KoreaMozambique
    BolivarianaMexicoTanzania
    deNew ZealandUganda
    Yemen,Norway
    Rep. ofPeru*†
    Philippines
    Poland
    South Africa
    Sweden
    Turkey*
    United
    Kingdom
    Source: IMF staff reports.

    Data are accurate as of December 31, 2002. The following countries were reclassified subsequent to that date: Egypt, Kuwait, Sudan, and República Bolivariana de Venezuela.

    An asterisk (*) indicates that the country has an IMF-supported or other monetary program. A dagger (t) indicates that the country adopts more than one nominal anchor in conducting monetary policy (it should be noted, however, that it would not be possible, for practical reasons, to infer from this table which nominal anchor plays the principal role in conducting monetary policy).

    These countries have a currency board arrangement.

    The country has no explicitly stated nominal anchor, but rather monitors various indicators in conducting monetary policy.

    Until they were withdrawn in the first quarter of 2002, national currencies retained their status as legal tender within their national territories.

    For El Salvador, the printing of new colones, the domestic currency, is prohibited, but the existing stock of colones will continue to circulate along with the U.S. dollar as legal tender until all colon notes wear out physically.

    The member maintains an exchange arrangement involving more than one market. The arrangement shown is that maintained in the major market.

    The regime operating de facto in the country is different from its de jure regime.

    Comoros has the same arrangement with the French Treasury as the CFA franc zone countries.

    The band widths for these countries are Cyprus (±15%), Denmark (±2.25%), Egypt (±3%), Hungary (±15%), and Tonga (±5%).

    The band widths for these countries are Belarus (±5%), Honduras (±7%), Israel (±22%), and Romania and Slovenia (unannounced).

    The Federal Republic of Yugoslavia was renamed Serbia and Montenegro on February 4, 2003.

    Insufficient information on the country is available for classification.

    Exchange Rate Arrangements and Anchors of Monetary Policy

    Classification of Exchange Rate Arrangements and Monetary Policy Frameworks

    The classification system is based on the members’ actual, de facto, regimes that may differ from their officially announced arrangements. The scheme ranks exchange rate regimes on the basis of the degree of flexibility of the arrangement. It distinguishes between the more rigid forms of pegged regimes (such as currency board arrangements); other conventional fixed peg regimes against a single currency or a basket of currencies; exchange rate bands around a fixed peg; crawling peg arrangements; and exchange rate bands around crawling pegs, in order to help assess the implications of the choice of exchange rate regime for the degree of independence of monetary policy. This includes a category to distinguish the exchange arrangements of those countries that have no separate legal tender. The system presents members’ exchange rate regimes against alternative monetary policy frameworks with the intention of using both criteria as a way of providing greater transparency in the classification scheme and to illustrate that different forms of exchange rate regimes could be consistent with similar monetary frameworks. The categories are explained in the compilation guide.

    Members’ exchange rate regimes are presented against alternative monetary policy frameworks in order to present the role of the exchange rate in broad economic policy and help identify potential sources of inconsistency in the monetary-exchange rate policy mix. The monetary policy frameworks listed are as follows.

    Exchange rate anchor

    The monetary authority stands ready to buy or sell foreign exchange at given quoted rates to maintain the exchange rate at its preannounced level or range (the exchange rate serves as the nominal anchor or intermediate target of monetary policy). These regimes cover exchange rate regimes with no separate legal tender, currency board arrangements, fixed pegs with or without bands, and crawling pegs with or without bands, where the rate of crawl is set in a forward-looking manner.

    Monetary aggregate target

    The monetary authority uses its instruments to achieve a target growth rate for a monetary aggregate (reserve money, Ml, M2, etc.) and the targeted aggregate becomes the nominal anchor or intermediate target of monetary policy.

    Inflation targeting framework

    This involves the public announcement of medium-term numerical targets for inflation, with an institutional commitment by the monetary authority to achieve these targets. Additional key features include increased communication with the public and the markets about the plans and objectives of monetary policymakers and increased accountability of the central bank for obtaining its inflation objectives. Monetary policy decisions are guided by the deviation of forecasts of future inflation from the announced inflation target, with the inflation forecast acting (implicitly or explicitly) as the intermediate target of monetary policy.

    IMF-supported or other monetary program

    This involves implementation of monetary and exchange rate policy within the confines of a framework that establishes floors for international reserves and ceilings for net domestic assets of the central bank. As the ceiling on net domestic assets limits increases in reserve money through central bank operations, indicative targets for reserve money may be appended to this system.

    Other

    The country has no explicitly stated nominal anchor, but rather monitors various indicators in conducting monetary policy. This is also used when no relevant information on the country is available.

    Summary Features of Exchange Arrangements and Regulatory Frameworks for Current and Capital Transactions in Member Countries1

    (As of date shown on first country page)2
    Total number of countries with this featureAfghanistan, I.S. ofAlbaniaAlgeriaAngolaAntigua and BarbudaArgentinaArmeniaArubaAustraliaAustriaAzerbaijanThe BahamasBahrain, Kingdom ofBangladeshBarbadosBelarusBelgiumBelizeBeninBhutanBoliviaBosnia and HerzegovinaBotswanaBrazilBrunei DarussalamBulgariaBurkina FasoBurundiCambodiaCameroonCanadaCape VerdeCentral African RepublicchadChileChina, People’s Rep. ofHong Kong SARColombiaComorosCongo, Dem. Rep. of theCongo, Republic ofCosta RicaCôte d’IvoireCroatiaCyprusCzech RepublicDenmarkDjiboutiDominicaDominican RepublicEcuadorEgyptEl SalvadorEquatorial GuineaEritreaEstoniaEthiopia.
    Status under IMF Articles of Agreement
    Article VIII158
    Article XIV29
    Exchange rate arrangements
    Exchange arrangement with no separate legal tender41
    Currency board arrangement7
    Conventional pegged arrangement42+++++++++++
    Pegged exchange rate within horizontal bands5*
    Crawling peg5
    Crawling band5
    Managed floating with no preannounced path for the exchange rate46
    Independently floating36
    Exchange rate structure
    Dual exchange rates11
    Multiple exchange rates3
    Arrangements for payments and receipts
    Bilateral payments arrangements64
    Payment arrears65
    Controls on payments for invisible transactions and current transfers98
    Proceeds from exports and/or invisible transactions
    Repatriation requirements101
    Surrender requirements79
    Capital transactions
    Controls on:
    Capital market securities128
    Money market instruments107
    Collective investment securities99
    Derivatives and other instruments83
    Commercial credits104
    Financial credits112
    Guarantees, sureties, and financial backup facilities92
    Direct investment149
    Liquidation of direct investment57
    Real estate transactions137
    Personal capital transactions97
    Provisions specific to.
    Commercial banks and other credit institutions160
    Institutional investors91
    Summary Features of Exchange Arrangements and Regulatory Frameworks for Current and Capital Transactions in Member Countries1

    (As of date shown on first country page)2

    FijiFinlandFranceGabonThe GambiaGeorgiaGermanyGhanaGreeceGrenadaGuatemalaGuineaGuinea-BissauGuyanaHaitiHondurasHungaryIcelandIndiaIndonesiaIran, I.R. ofIraqIrelandIsraelItalyJamaicaJapanJordanKazakhstanKenyaKiribatiKorea, Republic ofKuwaitKyrgyz RepublicLao People’s Dem. Rep.LatviaLebanonLesothoLiberiaLibyan Arab JamahiriyaLithuaniaLuxembourgMacedonia, fmr. Yugoslav Rep.MadagascarMalawiMalaysiaMaldivesMaliMaltaMarshall Islands, Rep. of theMauritaniaMauritiusMexicoMicronesia, Fed. States ofMoldovaMongoliaMoroccoMozambiqueMyanmarNamibia.
    Status under IMF Articles of Agreement.
    Article VIII•.
    Article XIV
    Exchange rate arrangements.
    Exchange arrangement with no separate legal tender
    Currency board arrangement
    Conventional pegged arrangement+++++++++.
    Pegged exchange rate within horizontal bands*
    Crawling peg
    Crawling band
    Managed floating with no preannounced path for the exchange rate
    Independently floating
    Exchange rate structure.
    Dual exchange rates
    Multiple exchange rates
    Arrangements for payments and receipts.
    Bilateral payments arrangements
    Payment arrears
    Controls on payments for invisible transactions and current transfers•.
    Proceeds from exports and/or invisible transactions.
    Repatriation requirements•.
    Surrender requirements•.
    Capital transactions.
    Controls on:
    Capital market securities•.
    Money market instruments•.
    Collective investment securities•.
    Derivatives and other instruments•.
    Commercial credits•.
    Financial credits•.
    Guarantees, sureties, and financial backup facilities•.
    Direct investment•.
    Liquidation of direct investment•.
    Real estate transactions•.
    Personal capital transactions•.
    Provisions specific to:
    Commercial banks and other credit institutions•.
    Institutional investors
    Summary Features of Exchange Arrangements and Regulatory Frameworks for Current and Capital Transactions in Member Countries1

    (As of date shown on first country page)2

    NepalNetherlandsNetherlands AntillesNew ZealandNicaraguaNigerNigeriaNorwayOmanPakistanPalauPanamaPapua New GuineaParaguayPeruPhilippinesPolandPortugalQatarRomaniaRussian FederationRwandaSt. Kitts and NevisSt. LuciaSt. Vincent and the GrenadinesSamoaSan MarinoSão Tomé and PríncipeSaudi ArabiaSenegalSerbia and MontenegroSeychellesSierra LeoneSingaporeSlovak RepublicSloveniaSolomon IslandsSomaliaSouth AfricaSpainSri LankaSudanSurinameSwazilandSwedenSwitzerlandSyrian Arab RepublicTajikistanTanzaniaThailandTimor-LesteTogoTongaTrinidad and TobagoTunisiaTurkeyTurkmenistanUgandaUkraineUnited Arab Emirates.United KingdomUnited StatesUruguayUzbekistanVanuatuVenezuela, Rep. Bolivariana ofVietnamYemen, Republic ofZambiaZimbabwe
    Status under IMF Articles or Agreement.
    Article VIII•.
    Article XIV
    Exchange rate arrangements.
    Exchange arrangement with no separate legal tender
    Currency board arrangement.
    Conventional pegged arrangement+++++++++++++.
    Pegged exchange rate within horizontal bands**
    Crawling peg
    Crawling band
    Managed floating with no preannounced path for the exchange rate
    Independently floating
    Exchange rate structure.
    Dual exchange rates
    Multiple exchange rates
    Arrangements for payments and receipts.
    Bilateral payments arrangements•.
    Payment arrears•.
    Controls on payments for invisible transactions and current transfers•.
    Proceeds from exports and/or invisible transactions.
    Repatriation requirements•.
    Surrender requirements•.
    Capital transactions.
    Controls on:
    Capital market securities•.
    Money market instruments•.
    Collective investment securities•.
    Derivatives and other instruments•.
    Commercial credits•.
    Financial credits•.
    Guarantees, sureties, and financial backup facilities•.
    Direct investment•.
    Liquidation of direct investment•.
    Real estate transactions•.
    Personal capital transactions•.
     Provisions specific to:.
    Commercial banks and other credit institutions•.
    Institutional investors•.
    For key and footnotes• Indicates that the specified practice is a feature of the exchange system.– Indicates that data were not available at time of publication.▄ Indicates that the specific practice is not regulated.♦ Indicates that member uses the currency of another member as legal tender.⋄ Indicates that member participates in the ECCU.▴ Indicates that the arrangement is pegged to the euro.⊕ Indicates that member participates in the euro area.+ Indicates that flexibility is limited to a single currency.▾ Indicates that the composite is a basket of other currencies.✠ Indicates that the country participates in the E RM II of the European monetary system* Indicates other band arrangements.

    Usually December 31, 2002.

    The listing includes Hong Kong SAR, Aruba, and the Netherlands Antilles.

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