VII. Exchange Arrangements and Capital Account Liberalization113
143. A detailed description of Hungary’s exchange arrangements can be found in SM/95/51 (3/15/95). Since then, Hungary accepted the obligations of Article VIII of the Fund’s Articles of Agreement on January 1, 1996. The main measure implemented regarding current transactions is that the limit on the purchases of foreign exchange for tourism was abolished as of January 1, 1997.
144. Since the last report on capital account liberalization (SM/96/207, 8/7/96) trading on the Budapest stock exchange in futures contracts of 3 to 12 months was allowed for foreign investors as of the last quarter of 1996. The first trading in such derivatives actually began in February 1997. This type of operation is not allowed under the general foreign exchange law and thus has been allowed on an experimental basis. The minimum maturity requirement for foreign investments of one year has been removed for banks trading in investment grade securities issued in OECD countries.
145. New legislation regarding foreign subsidiaries in Hungary that will be implemented in January 1998 and will liberalize certain aspects of capital transactions. While the details of the laws are not yet available, it is anticipated that two separate laws will be formulated relating to non-financial and financial institutions.
146. There are other aspects of capital account liberalization that are being contemplated such as allowing Hungarian companies to purchase securities issued in OECD countries regardless of their rating. Participation of non-residents in Hungarian open-ended investment funds and of Hungarian residents in investment funds in OECD countries is also under consideration. The authorities are also considering allowing Hungarian residents to purchase real estate abroad without any license or governmental permission.
Prepared by Perry Perone.