Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Front Matter

Front Matter

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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    ©2005 International Monetary Fund

    Library of Congress Cataloging-in-Publication 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.A13 157 [date] 341.7’51 79-644506

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    Letter of Transmittal to Members and Governors of the Fund

    August 31, 2005

    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, 2005, 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,

    Rodrigo de Rato

    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 Udaibir S. Das and comprising Judit Vadasz, Roy C. Baban, Jahanara Zaman, Harald Anderson, and Maria Zenaida de Mesa. It draws on the specialized contribution of that department (for specific countries), with assistance from staff members of the IMF’s five area departments, together with staff of other departments. The report was edited by Gail Berre and Esha Ray of the External Relations Department and produced by Mrs. de Mesa 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)

    AD

    Authorized dealer

    AFTA

    ASEAN free trade area (see ASEAN, below)

    AMU

    Asian monetary unit

    ANZCERTA

    Australia-New Zealand Closer Economic Relations and Trade Agreement

    APEC

    Asia Pacific Economic Cooperation

    ASEAN

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

    ATC

    Agreement on 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, 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 AFTA

    CET

    Common external tariff

    CFA

    Communauté financière d’Afrique (administered by the BCEAO) 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)

    CLS

    Continued Linked Settlement (integrated by Denmark, Norway, and Sweden)

    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

    ECC

    European Community Council

    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, 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 European monetary system)

    EU

    European Union (formerly European Community; integrated by Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, the United Kingdom, and, effective May 1, 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, and Slovenia)

    FATF

    Financial Action Task Force on Money Laundering (of the OECD)

    FSU

    Former Soviet Union

    GAFTA

    Greater Arab Free Trade Agreement

    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

    NAFA

    North American Framework Agreement (integrated by Canada, Mexico, and the United States)

    NAFTA

    North American Free Trade Agreement

    OECD

    Organization for Economic Cooperation and Development

    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, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, 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, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, 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)

    SCP

    Scandinavian Cash Pool (integrated by Denmark, Norway, and Sweden)

    SDR

    Special drawing right

    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

    UCIT

    Undertakings for the Collective Investment of Transferable Securities

    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 WACH)

    WAMZ

    West African Monetary Zone

    W-ERM II

    Exchange rate mechanism (of the WAMZ)

    WTO

    World Trade Organization

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

    INTRODUCTION

    This edition (the fifty-sixth issue) of the Annual Report on Exchange Arrangements and Exchange Restrictions provides a description of the foreign exchange arrangements, exchange and trade restrictions, and, to a limited extent, prudential measures of individual IMF member countries.1 The 2005 edition further attempts to describe exchange and trade systems in their entirety, going beyond simply those aspects involving exchange restrictions or exchange controls.2,3

    Overall Developments

    This report highlights a continuing trend toward the easing of controls in all areas covered by the yearbook. Very few countries introduced new controls or limitations on foreign exchange transactions during 2004. Major trends and significant overall developments documented in this report are the following:

    • Six countries accepted the obligations of Article VIII, Sections 2, 3, and 4, of the IMF’s Articles of Agreement.

    • Changes in exchange rate regimes and exchange arrangements indicated a move toward more flexible exchange rate regimes by several countries and regional developments in several West African and European countries resulting from their entry into currency unions and/or accession to the European Union.

    • The general thrust of changes affecting the regulatory framework of foreign exchange transactions was toward the easing of controls in the areas of resident and nonresident accounts, and current and capital account transactions.

    • Changes in the prudential measures of many countries were also directed toward the easing of requirements.4

    • There was a significant increase in notifications to the IMF involving the enforcement of restrictions for security reasons. These restrictions were introduced as a result of the emphasis on preventing the financing of terrorism.5

    The sections below highlight developments in the major areas covered in this edition. Details of the exchange arrangements and regulatory frameworks for current and capital transactions in member countries are available in the individual country chapters.

    Developments in Exchange Arrangements

    The exchange arrangements maintained by members are classified into eight categories.6 These categories are based on the flexibility of the arrangement and how it operates in practice—i.e., the de facto regime is described instead of simply following the de jure or official description of the arrangement. Definitions of the individual categories are described in detail in the Compilation Guide.

    From data presented in Table 1, two major trends can be observed:

    Table 1.Changes and the Resulting Reclassifications of Exchange Rate Regimes, End-July 2005
    Nature of ChangeCurrent Status
    BotswanaThe Bank of Botswana devalued the pula by 12% against the basket of currencies to which it is pegged.Reclassification to crawling peg from conventional pegged arrangement.
    China, People’s Republic ofEffective July 21, 2005, the renminbi was revalued to RMB 8.11 per US$1 and its exchange rate is to be determined based on an undisclosed basket of currencies. Daily fluctuations in the renminbi-dollar exchange rate remain limited to ±0.3% around a central rate, based on the market closing rate of the previous day. Daily fluctuations of the renminbi against other currencies will be limited to ±1.5%.Because the official IMF classification is based on the de facto behavior of the exchange rate (i.e., actual or observed movements for at least three months), no reclassification has been made at this time.
    Dominican RepublicEnd of intervention in the foreign exchange market to manage the exchange rate.Reclassification to independently floating from managed floating with no predetermined path for the exchange rate.
    EstoniaAdoption of the ERM II.No reclassification because the authorities are maintaining the currency board arrangement.
    GuatemalaRegular interventions on the foreign exchange market.Reclassification to managed floating with no predetermined path for the exchange rate from independently floating.
    GuineaThe official exchange rate auction abandoned.Reclassification to managed floating with no predetermined path for the exchange rate from conventional pegged arrangement.
    HondurasMove in the exchange rate band.Reclassification to crawling peg from exchange rate within crawling band.
    Hong Kong SARThe Hong Kong Monetary Authority established a trading band of HK$7.75–HK$7.85 per US$1.No reclassification, because the authorities are maintaining the currency board arrangement.
    IraqLimited fluctuations of the dinar within ±1 percent.Reclassification to conventional fixed peg from managed floating with no predetermined path for the exchange rate.
    IsraelRemoval of the crawling band.Reclassification to independently floating from exchange rate within crawling bands.
    LatviaAdoption of the ERM II.No reclassification because the authorities are maintaining the conventional pegged arrangement.
    LithuaniaAdoption of the ERM II.No reclassification because the authorities are maintaining the currency board arrangement.
    MalaysiaEffective July 22, 2005, moved from a peg to the U.S. dollar to a managed float for the ringgit with reference to an undisclosed currency basket.Because the official IMF classification is based on the de facto behavior of the exchange rate (i.e., actual or observed movements for at least three months), no reclassification has been made at this time
    NigeriaAdoption of the W-ERM II of the WAMZ.No reclassification because the authorities have not implemented the requirement that the spot exchange rate of the naira and the dollar be maintained within ±15% around the central rate.
    RomaniaLimited interventions in the foreign exchange market.Reclassification to managed floating with no predetermined path for the exchange rate from crawling band.
    Sierra LeoneAdoption of the W-ERM II of the WAMZ.No reclassification because the authorities have not implemented the requirement that the spot exchange rate of the leone and the dollar be maintained within ±15% around the central rate.
    SloveniaAdoption of the ERM II.Reclassification to pegged exchange rate within horizontal bands from crawling band.
    SurinameLimited interventions in the foreign exchange market.Reclassification to managed floating with no predetermined path for the exchange rate from conventional pegged arrangement.
    Trinidad and TobagoAuthorities intervene in order to maintain a specific exchange rate.Reclassification to conventional pegged arrangement from managed floating with no predetermined path for the exchange rate.
    ZimbabweLimited interventions in the foreign exchange market.Reclassification to managed floating with no predetermined path for the exchange rate from conventional pegged arrangement.
    • A move toward more flexible exchange rate regimes. The operations of the exchange rate systems of Botswana, Dominican Republic, Guinea, Israel, Romania, Suriname, and Zimbabwe became more flexible, while those of Guatemala, Honduras, and Trinidad and Tobago moved in the other direction. Recent moves by China and Malaysia also reflect the trend toward more flexible exchange rate regimes (although no reclassification has been made as yet for either country).

    • Changes made by countries in accordance with membership in multilateral or regional agreements. On regional trends, four European countries (Estonia, Latvia, Lithuania, and Slovenia) adopted the ERM II in the context of their accession to the European Union. At the same time, two countries in West Africa (Nigeria and Sierra Leone) joined the W-ERM II of the WAMZ, although neither have yet implemented the arrangement.

    Box 1 shows exchange arrangements, at end-July 2005, as a result of reclassifications of the exchange rate regimes.

    Box 1.Exchange Arrangements and Anchors of Monetary Policy, End-July 20051

    Exchange ArrangementNumber of Countries
    Exchange arrangement with no separate legal tender41
    Currency board arrangement7
    Conventional pegged arrangement39
    Pegged exchange rate within horizontal bands5
    Crawling pegs6
    Crawling bands1
    Managed floating with no predetermined path for the exchange rate53
    Independently floating35

    Includes Aruba, Hong Kong SAR, and the Netherlands Antilles along with the 184 IMF members.

    Changes in the exchange arrangements not related to elements of the exchange rate regime used for classification (Table 2) were mostly directed toward the easing of controls, with 14 measures pointing in this direction against 8 that could be viewed as having become more restrictive. The measures are summarized below:

    Table 2.Changes in Exchange Arrangements, End-July 2005
    ChangeType of Change
    BangladeshAuthorized dealers were permitted to undertake currency swaps and forward exchange transactions only against underlying approved commercial transactions.Tightening of controls
    BurundiExchange bureaus were authorized to participate in the weekly foreign exchange auctions.Easing of controls
    The official exchange rate was changed from a weekly fixed rate determined in the central bank auction to the daily average of commercial bank rates.Easing of controls
    CameroonTaxes on foreign exchange transactions were eliminated.Easing of controls
    Congo, Republic ofThe commission applicable to payments destined to all countries was increased to 1% from 0.75%.Tightening of controls
    Czech RepublicThe number of currencies for which the Czech National Bank publishes daily rates was increased to 29 from 16.Neutral/institutional change
    Dominican RepublicThe foreign exchange market was unified.Easing of controls
    LatviaRepeg from the SDR to the euro.Neutral/institutional change
    MadagascarIn the context of the move to a computer-based foreign exchange trading system, the exchange rate for the dollar was quoted in addition to the euro in the official interbank market.Neutral/institutional change
    MalaysiaResidents with permitted foreign currency borrowing were allowed to enter into interest rate swaps with onshore licensed banks, approved merchant banks, or licensed offshore banks in Labuan, provided that the transaction is supported by a firm underlying commitment.Easing of controls
    Residents were allowed to enter into forward foreign exchange contracts with licensed offshore banks and approved merchant banks to purchase or sell any foreign currency against ringgit or another foreign currency, provided that the contracts are supported by underlying transactions.Easing of controls
    MauritaniaThe Central Bank of Mauritania suspended the foreign exchange auction mechanism and introduced an explicit system of foreign exchange rationing.Tightening of controls
    MexicoThe Bank of Mexico modified the daily auction mechanism for sales of dollars, distributing in equal parts the amount of dollars to be sold each day during the following four quarters (previously, one quarter).Easing of controls
    NicaraguaThe annual rate of crawl (depreciation) of the córdoba against the dollar was reduced to 5% from 6%.Neutral/institutional change
    São Tomé and PrincipeThe central bank issued a regulation reestablishing the foreign exchange auction.Neutral/institutional change
    Serbia and MontenegroThe National Bank of Serbia widened the margin between the buying and selling rates for foreign exchange transactions in cash to ±0.7% from ±0.6%.Easing of controls
    SudanThe exchange rate band was expanded to ±3% from ±2% around the previous day’s closing rate.Easing of controls
    SurinameThe Suriname dollar replaced the Suriname guilder as the national currency; the conversion between the two currencies was effected at a rate of SRD 1 per Sf 1,000.Neutral/institutional change
    The ceiling and floor of the market-determined exchange rate (set by commercial banks and cambios) were abolished.Easing of controls
    SwazilandThe South African rand was declared official legal tender in addition to the lilangeni, which remains official legal tender.Neutral/institutional change
    Syrian Arab RepublicThe budget accounting rates (except for transactions to service debt under certain bilateral payment agreements) were unified into the “exchange rate for public sector,” at the rate of LS 48.50/48.65 per $1 in 2004 and LS 50 per $1 starting January 2005.Easing of controls
    Starting May 2005, the exchange rate for private sector transactions is being quoted by the central bank rather than by the Commercial Bank of Syria. Decree 865 of March 2005 (to be implemented) authorizes private banks to apply the “free exchange rate for private transactions” to imports of raw materials and intermediate goods.Easing of controls
    UkraineA 1.5% fee was imposed on purchases of noncash foreign currency; the proceeds were earmarked for government pension insurance.Tightening of controls
    Banks were temporarily prohibited from buying or selling foreign exchange at a rate that deviated more than 2 percent from the official exchange rate. Cash foreign currency bought from the National Bank of Ukraine (NBU) could be resold to the NBU within two months at the original purchase price.Tightening of controls
    Banks were permitted to purchase foreign currency from the NBU on the interbank market only for their own needs and to fulfill the requirements of their clients (rather than other banks).Easing of controls
    Certain temporary measures effective until December 29, 2004, were adopted. Asset transaction volumes (other than those involving government or NBU securities, or interbank transactions) could not exceed the level of November 30, 2004. Foreign exchange sales by banks could not exceed $1,000 for cash transactions, and $50,000 for noncash transactions, except with the written consent of the bank manager (or authorized agent). Time deposits (local and foreign currency) could not be withdrawn prior to maturity.Tightening of controls
    Banks were temporarily required to provide information before noon on requests accepted from clients for the purchase of foreign exchange in amounts greater than $100,000 on the interbank market that day. Banks that did not provide such information would not be allowed to participate in the market.Tightening of controls
    Banks were temporarily prohibited from supplying foreign exchange bureaus with cash foreign exchange or traveler’s checks.Tightening of controls
    Venezuela, República Bolivariana deThe bolívar was re-pegged to Bs 2,144.60 (buying) and Bs 2,150.00 (selling) per $1 from Bs 1,915.20 (buying) and Bs 1,920 (selling) per $1.Neutral/institutional change
    ZimbabweThe percentage of export receipts that the foreign currency accounts of gold producers could be credited was raised to 40% from 20%, and tobacco producers were treated as direct exporters for the purpose of exchange rate management, as well as access to foreign currency.Easing of controls
    A guaranteed floor exchange rate of Z$6,200 per US$1 was introduced for inward remittances that was later revised to Z$9,000 per US$1 and Z$17,500 per US$1.Neutral/institutional change
    An enhanced incentive framework was introduced for horticulture products.Neutral/institutional change
    • The most notable steps were unifying some of the multiple exchange rates (Syrian Arab Republic and Zimbabwe); unifying markets (Dominican Republic); allowing exchange bureaus to participate in the interbank market (Burundi); eliminating exchange taxes (Cameroon); changing the method of operating the foreign exchange market, including the elimination or reinstatement of the auction system (Burundi, Mexico, and São Tomé and Príncipe); and using a tender instead of direct purchases of foreign exchange (Zimbabwe).

    • The few measures that were directed at increasing constraints consisted of allowing currency swaps and forward exchange transactions only against approved commercial transactions (Bangladesh); and raising the commissions applied for outward transfers (Republic of Congo). In addition, Ukraine introduced the following temporary tightening measures: imposing a fee on purchases of noncash foreign currency, limiting asset transaction volumes and foreign exchange sales by banks, prohibiting the sale of foreign exchange by banks to exchange bureaus, and prohibiting banks from participating in the interbank market if they have not provided information on requests from clients for the purchase of foreign exchange exceeding $100,000 or its equivalent.

    Acceptance of Article VIII Obligations

    Six IMF member countries accepted Article VIII obligations during 2004 and the first half of 2005. These include Azerbaijan, Cape Verde, Colombia, Egypt, Islamic Republic of Iran, and Tajikistan. IMF members accepting the obligations of Article VIII, Sections 2, 3, and 4, commit to refrain from imposing restrictions on the making of payments and transfers for current international transactions, and from engaging in discriminatory currency arrangements or multiple currency practices, except with IMF approval. As a result of these developments, out of the IMF’s 184 members, 20 have not yet accepted the obligations of Article VIII, Sections 2, 3, and 4.7

    Regulatory Framework for Foreign Exchange Transactions

    This section describes the salient features of the changes in a large number of categories, including arrangements for payments and receipts, payments for invisible transactions and current transfers, capital account transactions, and the regulation of resident and nonresident accounts. The measures can be summarized as follows:

    • As in other categories, the general thrust of the measures taken by members in 2004 and 2005 was toward the easing of controls. Only a few countries took steps that were of a restrictive nature (of the 56 countries that notified the IMF of changes in these categories, only 10 moved toward introducing limitations on some transactions). The category in which the most countries moved toward expanding limitations is the regulation of the inflow of foreign direct investments (with five countries moving toward a more restrictive stance). It should be noted, however, that limitations in this category are often motivated by reasons other than economic factors (similar to the regulation of real estate investments by nonresidents).

    • Repatriation and surrender requirements moved less unequivocally toward removal of controls; five countries either introduced or increased repatriation or surrender requirements, while the same number of countries relaxed controls over these transactions.

    • Of several countries that maintained limits on payments and transfers for current account transactions and/or capital movements, 19 either abolished or raised these limits.

    • One country (Russia) introduced unremunerated reserve requirements as a capital control, and linked these requirements to the re-regulation of the foreign exchange accounts of residents and the domestic currency accounts of nonresidents.

    Provisions for Commercial Banks and Institutional Investors

    Altogether, out of 52 measures taken, 34 implied the easing of requirements. The most important of these were reductions in reserve requirements for commercial banks; permission to financial institutions to contract external borrowing or to increase the limits on such borrowings; relaxation of the ownership limits applied to nonresidents in nonbank financial institutions; and some easing of controls on unit trust management companies and insurers, allowing them to invest abroad a larger proportion of the assets under their management.

    Some of the reported changes were made to allow the building of instruments and institutions of prudential oversight and therefore could not be linked directly with the easing or tightening of rules. These include most of the changes to the methods of calculating net open positions of banks, setting of exposure limits to securities, and establishing prescriptions for the way in which technical provisions of insurance companies are determined. Some other measures simply reflect new circumstances, most notably changes in the remuneration of reserves (except when the remuneration was eliminated).

    Procedural Guide

    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 significant changes during 2004 and, in the case of some countries, those that occurred through end-July 2005. The Compilation Guide provides the definitions and methodology used to bring together information under each heading.

    The report is presented in a tabular format that enhances transparency and uniformity of treatment of information across countries and includes coverage on the regulatory framework for capital transactions. The information serves to update 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 a 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.

    Listing conventions used in the report are as follows:

    • 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 staff with information indicating 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 VIII, 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 officially allowed to be used in the country.
    Exchange rate structureIf there is one exchange rate, the system is called unitary; if there is more than one exchange rate 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 a regime implies the complete surrender of 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 will be issued only against foreign exchange and that it remains fully backed by foreign assets, eliminating traditional central bank functions such as monetary control and lender-of-last-resort, and leaving little scope for discretionary monetary policy. Some flexibility may still be afforded, depending on how strict the banking rules of the currency board arrangement are.
    Conventional pegged arrangementThe country (formally or de facto) pegs its currency 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 geographic distribution of trade, services, or capital flows. The currency composites can also be standardized, as in the case of the SDR. There is no commitment to keep the parity irrevocably. The exchange rate may fluctuate within narrow margins of less than ±1 percent around a central rate—or the maximum and minimum value of the exchange rate may remain within a narrow margin of 2 percent—for at least three months. The monetary authority stands ready to maintain the fixed parity through direct intervention (i.e., via sale or purchase of foreign exchange in the market) or indirect intervention (e.g., via aggressive use of interest rate policy, imposition of foreign exchange regulations, exercise of moral suasion that constrains foreign exchange activity, or through intervention by other public institutions). Flexibility of monetary policy, though limited, is greater than in the case of exchange arrangements with no separate legal tender and currency boards 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 percent around a fixed central rate, or the margin between the maximum and minimum value of the exchange rate exceeds 2 percent. It also includes arrangements of countries in the ERM of the European Monetary System (EMS), which was replaced with the ERM II on January 1, 1999. There is a limited degree of monetary policy discretion, depending on the bandwidth.
    Crawling pegThe currency is adjusted periodically in small amounts at a fixed rate or in response to changes in selective quantitative indicators, such as past inflation differentials vis-à-vis major trading partners or differentials between the inflation target and expected inflation in major trading partners. The rate of crawl can be set to generate inflationadjusted changes in the exchange rate (backward looking), or set at a preannounced fixed rate and/or below the projected inflation differentials (forward looking). Maintaining a crawling peg imposes constraints on monetary policy in a manner similar to a fixed peg system.
    Crawling bandThe currency is maintained within certain fluctuation margins of at least ±1 percent around a central rate—or the margin between the maximum and minimum value of the exchange rate exceeds 2 percent—and the central rate or margins are adjusted periodically at a fixed rate or in response to changes in selective quantitative indicators. The degree of exchange rate flexibility is a function of the bandwidth. Bands are either symmetric around a crawling central parity or widen gradually with an asymmetric choice of the crawl of upper and lower bands (in the latter case, there may be no preannounced central rate). The commitment to maintain the exchange rate within the band imposes constraints on monetary policy, with the degree of policy independence being a function of the bandwidth.
    Managed floating with no predetermined path for the exchange rateThe monetary authority attempts to influence the exchange rate without having a specific exchange rate path or target. Indicators for managing the rate are broadly judgmental (e.g., balance of payments position, international reserves, parallel market developments), and adjustments may not be automatic. Intervention may be direct or indirect.
    Independently floatingThe exchange rate is market-determined, with any official foreign exchange market intervention aimed at moderating the rate of change and preventing undue fluctuations in the exchange rate, rather than establishing a level for it.
    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 in which 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 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 any restrictions on the use of foreign currency among residents.
    Payments arrangements
    Bilateral payments arrangementsTwo countries have an agreement to prescribe specific rules for payments to each other, including cases in which 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)Separate rules for trading in gold domestically and with foreign countries.
    Controls on exports and imports of banknotesRegulations governing 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, and 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 among individual importers.
    Financing requirements for importsInformation on specific import-financing regulations limiting the rights of residents to enter into private contracts in which the financing options differ from those in 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 used not 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., phytosanitary examinations, setting of standards), but these are not covered fully in the report.
    Import taxes and/or tariffsA brief description of the import tax and 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 importation 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 enter into private contracts in which the financing options differ from those in 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 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 and insurance (including possible regulations on non–trade related insurance payments and transfers); unloading and storage costs; administrative expenses; commissions; and customs duties and fees.
    Investment-related paymentsIncludes profits and dividends; interest payments (including interest on debentures, mortgages, etc.); 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, etc.
    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 and alimony (including regulations on payments and transfers abroad of family maintenance and 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 and membership fees, authors’ royalties, consulting and legal fees, etc.
    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 of 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 lasting economic interest in the management of the enterprise concerned. Investment for the purpose of acquiring a lasting economic interest is addressed 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 shortterm 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 nonsecured 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 (e.g., 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 (spot or forward trading on the foreign exchange markets, forward cover operations, etc.) 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 domestically by nonresidents. These investments are essentially for the purpose 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, including, 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 (e.g., loans or settlements of debt in their country of origin by immigrants), and transfers effected free of charge to the beneficiary (e.g., gifts and endowments, loans, inheritances and legacies, or 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 (e.g., 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, on credit operations, or on 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 Rate Regime



    (Number of countries)
    Monetary Policy Framework
    Exchange rate anchorMonetary aggregate targetInflation targeting frameworkIMF-supported or other monetary programOther
    Exchange arrangements with no separate legal tender (41)
    Another currency as legal tender (9)CFA franc zone (14)
    ECCU (6)3WAEMUCAEMC
    EcuadorAntigua andBeninCameroon*
    El Salvador5BarbudaBurkinaCentral
    KiribatiDominica*Faso*African
    Marshall IslandsGrenadaCôteRep.
    Micronesia,St. Kitts andd’Ivoire*Chad
    Fed. States ofNevisGuinea-Congo,
    PalauSt. LuciaBissauRep. of
    PanamaSt. VincentMali*Equatorial
    San Marinoand theNigerGuinea
    Timor-Leste,GrenadinesSenegal*Gabon*
    Dem. Rep. ofTogo
    Euro area (12)4

    Austria

    Belgium

    Finland

    France

    Germany

    Greece

    Ireland

    Italy

    Luxembourg

    Netherlands

    Portugal

    Spain

    currency board arrangements (7)Bosnia and Herzegovina6

    Brunei Darussalam

    Bulgaria

    China—Hong Kong SAR

    Djibouti

    Estonia7

    Lithuania7
    Other conventional fixed peg arrangements (40)
    Against a single currency (32)Against a composite (8)
    ArubaBotswana8
    Bahamas, The8Fiji
    Bahrain, Kingdom ofLatvia
    BarbadosLibyan Arab Jamahiriya
    BelizeMalta
    BhutanMorocco
    Cape Verde*Samoa
    China, P.R. of†9Vanuatu
    Comoros10
    Eritrea
    Guinea9
    Iraq9
    Jordan*9
    Kuwait
    Lebanon9
    Lesotho*
    Macedonia, FYR*9
    Malaysia
    Maldives
    Namibia
    Nepal*
    Netherlands Antilles
    Oman
    Qatar
    Saudi Arabia
    Seychelles9
    Swaziland
    Syrian Arab Rep.8
    Turkmenistan9
    Ukraine*9
    United Arab Emirates
    Venezuela, Rep. Bolivariana de
    China, P.R. of †9
    Pegged exchange rates within horizontal bands (5)11
    Within a cooperative arrangement (2)

    Denmark7

    Slovenia7
    Other band arrangements (3)

    Cyprus

    Hungary†

    Tonga
    Hungary †
    Crawling pegs (5)Bolivia*

    Costa Rica

    Honduras*9

    Nicaragua*

    Solomon Islands9
    Honduras †
    Exchange rates within crawling bands (1)Belarus12
    Managed floating with no predetermined path for the exchange rate (54)Bangladesh*

    Cambodia8

    Egypt

    Ethiopia

    Ghana*9

    Guyana*

    Indonesia

    Iran, I.R. of

    Jamaica9

    Mauritius

    Moldova

    Sudan

    Suriname8

    Tunisia

    Zambia*
    Colombia*

    Czech Rep.

    Guatemala9

    Peru*

    Thailand
    Argentina*

    Azerbaijan*

    Croatia

    Georgia*

    Haiti4,9

    Kenya*

    Kyrgyz Rep.*

    Lao P.D.R.*8

    Mongolia*

    Mozambique9

    Rwanda*

    Serbia and Montenegro*13

    Tajikistan*

    Vietnam*
    Afghanistan, I.R. of

    Algeria4

    Angola4

    Burundi*4

    Gambia, The*4, 9

    India4

    Kazakhstan4

    Mauritania, I.R. of*

    Myanmar4, 8, 9

    Nigeria9

    Pakistan4

    Paraguay*4

    Romania

    Russian Federation4

    São Tomé and

    Príncipe

    Singapore4

    Slovak Rep.4

    Trinidad and Tobago

    Uzbekistan4, 8

    Zimbabwe8
    Independently floating (34)Malawi*

    Sierra

    Leone*9

    Sri Lanka*

    Uruguay*

    Yemen, Rep. of
    Australia

    Brazil*

    Canada

    Chile

    Iceland

    Israel†9

    Korea, Rep. of

    Mexico

    New Zealand

    Norway

    Philippines

    Poland

    South Africa

    Sweden

    Turkey*

    United

    Kingdom
    Albania*

    Armenia*

    Congo, Dem.

    Rep. of*

    Madagascar*

    Tanzania*

    Uganda*
    Dominican Rep.*4

    Japan4

    Liberia4, 9

    Papua New Guinea4

    Somalia8, 14

    Switzerland4

    United States4
    Source: IMF staff reports.

    As of December 31, 2004. The following countries were reclassified subsequent to that date: Botswana, Guinea, and Latvia.

    An asterisk (*) indicates that the country has an IMF-supported or other monetary program. A dagger (†) 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 include in this table which nominal anchor plays the principal role in conducting monetary policy).

    The ECCU has a currency board arrangement.

    These countries have no explicitly stated nominal anchor, but rather monitor various indicators in conducting monetary policy.

    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 colón notes wear out physically.

    In the Republika Srpska, the Serbian dinar circulates.

    The member participates in the ERM II of the European monetary system.

    The member maintains an exchange arrangement involving more than one foreign exchange 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 as follows: Cyprus ±15%, Denmark ±2.25%, Hungary ±15%, Slovenia (unannounced), and Tonga ±5%.

    The band widths for this country are adjusted frequently.

    The description of the exchange rate regime applies to the Republic of Serbia only, which accounts for about 93% of the economy of Serbia and Montenegro; in the Republic of Montenegro, the euro is legal tender. In the UN-administered province of Kosovo, the euro is the most widely used currency.

    Insufficient information on the country is available to confirm this classification, so the classification of the last official consultation is used.

    Classification of Exchange Rate Arrangements and Monetary Policy Frameworks

    The classification system is based on the members’ actual, de facto, regimes, which 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 among 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 predetermined 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, M1, 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 member countries with this featureAfghanistan, I.R. ofAlbaniaAlgeriaAngolaAntigua and BarbudaArgentinaArmeniaAustraliaAustriaAzerbaijan, Republic ofThe BahamasBahrain, Kingdom ofBangladeshBarbadosBelarusBelgiumBelizeBeninBhutanBoliviaBosnia and HerzegovinaBotswana
    Status under IMF Articles of Agreement
    Article VIII164
    Article XIV20
    Exchange rate arrangements
    Exchange arrangement with no separate legal tender41
    Currency board arrangement6
    Conventional pegged arrangement37+
    Pegged exchange rate within horizontal bands5
    Crawling peg6*
    Crawling band1+
    Managed floating with no pre­determined path for the exchange rate53
    Independently floating35
    Exchange rate structure
    Dual exchange rates7
    Multiple exchange rates4
    Arrangements for payments and receipts
    Bilateral payments arrangements64
    Payments arrears57
    Controls on payments for invisible transactions and current transfers92
    Proceeds from exports and/or invisible transactions
    Repatriation requirements92
    Surrender requirements70
    Capital transactions
    Controls on:
    Capital market securities126
    Money market instruments103
    Collective investment securities97
    Derivatives and other instruments83
    Commercial credits98
    Financial credits109
    Guarantees, sureties, and financial backup facilities87
    Direct investment143
    Liquidation of direct investment54
    Real estate transactions135
    Personal capital transactions97
    Provisions specific to:
    Commercial banks and other credit institutions157
    Institutional investors91
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    BrazilBrunei DarussalamBulgariaBurkina FasoBurundiCambodiaCameroonCanadaCape VerdeCentral African RepublicChadChileChina, People’s Rep. ofColombiaComorosCongo, Dem. Rep. ofCongo, Republic ofCosta RicaCôte d’IvoireCroatiaCyprusCzech RepublicDenmarkDjiboutiDominicaDominican RepublicEcuadorEgyptEl SalvadorEquatorial GuineaEritreaEstoniaEthiopiaFijiFinland
    +
    *
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    FranceGabonGambia, TheGeorgiaGermanyGhanaGreeceGrenadaGuatemalaGuineaGuinea-BissauGuyanaHaitiHondurasHungaryIcelandIndiaIndonesiaIran, I.R. ofIraqIrelandIsraelItalyJamaicaJapan
    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 pre­determined path for the exchange rate
    Independently floating
    Exchange rate structure
    Dual exchange rates
    Multiple exchange rates
    Arrangements for payments and receipts
    Bilateral payments arrangements
    Payments 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
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    JordanKazakhstanKenyaKiribatiKorea, Republic ofKuwaitKyrgyz RepublicLao People’s Dem. Rep.LatviaLebanonLesothoLiberiaLibyan Arab JamahiriyaLithuaniaLuxembourgMacedonia, fmr. Yugoslav Rep.MadagascarMalawiMalaysiaMaldivesMaliMaltaMarshall Islands, Rep. of theMauritaniaMauritiusMexicoMicronesia, Fed. States ofMoldovaMongoliaMoroccoMozambiqueMyanmarNamibiaNepalNetherlands
    +++
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    New ZealandNicaraguaNigerNigeriaNorwayOmanPakistanPalauPanamaPapua New GuineaParaguayPeruPhilippinesPolandPortugalQatarRomaniaRussian FederationRwandaSt. Kitts and NevisSt. LuciaSt. Vincent and the GrenadinesSamoaSan MarinoSão Tomé and Príncipe
    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 pre­determined path for the exchange rate
    Independently floating
    Exchange rate structure
    Dual exchange rates
    Multiple exchange rates
    Arrangements for payments and receipts
    Bilateral payments arrangements
    Payments 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
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    Saudi ArabiaSenegalSerbia and MontenegroSeychellesSierra LeoneSingaporeSlovak RepublicSloveniaSolomon IslandsSomaliaSouth AfricaSpainSri LankaSudanSurinameSwazilandSwedenSwitzerlandSyrian Arab RepublicTajikistanTanzaniaThailandTimor-Leste, Dem. Rep. ofTogoTongaTrinidad and TobagoTunisiaTurkeyTurkmenistanUgandaUkraineUnited Arab EmiratesUnited KingdomUnited StatesUruguay
    +
    *
    *
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    UzbekistanVanuatuVenezuela, Rep. Bolivariana deVietnamYemen, Republic ofZambiaZimbabweMemorandum: NonmembersArubaChina, P.R.: Hong Kong SARNetherlands Antilles
    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 pre­determined path for the exchange rate
    Independently floating
    Exchange rate structure
    Dual exchange rates
    Multiple exchange rates
    Arrangements for payments and receipts
    Bilateral payments arrangements
    Payments 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
    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 the member participates in the euro area.❖ Indicates that the country participates in the ERM II.◊ Indicates that flexibility is limited vis-à-vis the U.S. dollar.▲ Indicates that flexibility is limited vis-à-vis the euro.+ Indicates that flexibility is limited vis-à-vis another single currency.○ Indicates that flexibility is limited vis-à-vis the SDR.٭ Indicates that flexibility is limited vis-à-vis another basket of currencies.

    The entries for Aruba, Hong Kong SAR, and the Netherlands Antilles are located at the end of the table.

    Usually December 31, 2004.

    In addition to the 184 IMF members, the report includes 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.

    Excluding the import tariff structure.

    In general, the descriptions relate to the exchange and trade systems as of end-2004, but, in some cases, reference is made to significant developments that occurred through end-July 2005. As in previous reports, questions of definition and jurisdiction are not covered.

    The report covers only foreign exchange–related prudential regulations; hence, prudential measures that do not differentiate between domestic currency and foreign exchange and/or residents and nonresidents are not dealt with.

    Twenty-three countries notified the IMF of restrictions they had imposed, and only two countries lifted such restrictions.

    The categories comprise: (1) exchange arrangement with no separate legal tender, (2) currency board arrangement, (3) conventional pegged arrangement, (4) pegged exchange rate within horizontal bands, (5) crawling peg, (6) crawling bands, (7) managed floating with no predetermined path for the exchange rate, and (8) independently floating.

    These countries are listed in the Summary Features of Exchange Arrangements.

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