Chapter

NICARAGUA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 30, 1964.
Exchange Arrangement
CurrencyThe currency of Nicaragua is the Nicaraguan córdoba.
Exchange rate structureUnitary.
Classification
Crawling pegAs of July 11, 1999, the devaluation of the córdoba against the dollar was slowed to an annual rate of 9% from 12% and as of November 1, 1999, to an annual rate of 6%. The central government and financial institutions are free to undertake purchases or sales of foreign exchange with the Central Bank of Nicaragua (CBN).
Exchange taxThere is no tax, but the CBN charges a commission of 1% on sales of foreign exchange.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Regional arrangementsNicaragua is a member of the CACM.
Administration of controlExchange operations between private agents are not restricted. The CBN allows authorized commercial banks and exchange houses to make foreign exchange transactions.
International security restrictionsNo.
Payment arrears
OfficialPayment arrears are maintained with members of the Paris Club and non-Paris Club countries.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeThe Nicaraguan Mining Institute manages the country’s gold production. An authorization from the CBN is required to operate as a gold exporter. Natural and juridical persons may trade gold coins (commemorative gold coins were issued in 1967, 1975, and 1980) for numismatic purposes only.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsCórdoba accounts with exchange guarantee (maintenance of value) contracts may be opened with commercial banks.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsAll importers must submit an import declaration form either to commercial banks or to customs when they are using their own resources.
Letters of creditSome import payments are made with sight drafts, but almost all are made through LCs.
Import licenses and other nontariff measures
Open general licensesYes.
Import taxes and/or tariffsAs of January 1, 1999, imports of 746 items are subject to a temporary import tariff of 15% independent of their origin, and all imports are subject to a sales tax and the Central American Common Tariff. On July 1, 1999, the maximum tariff was reduced to 10%. The maximum import tariff for certain tobacco and alcoholic beverage items is 20%. Effective November 30, 1999, an additional 35% import duty was imposed, a “sovereignty tax,” on imports from Honduras and Colombia.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are not required, but all exports must be registered with the Ministry of Economy.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial credits
To residents from nonresidentsFor statistical purposes, these credits must be reported to the CBN within 30 days after the credits have been granted.
Financial credits
To residents from nonresidentsThe same requirement applies as for commercial credits.
Controls on direct investment
Inward direct investmentForeign exchange originating from new investments or additions to capital must be surrendered to the CBN through commercial banks. However, in practice this regulation has become obsolete as a result of the elimination of exchange controls.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutions
Purchase of locally issued securities denominated in foreign exchangeThese instruments may only be issued by the CBN or the government.
Investment regulations
Abroad by banksThere are prudential limits.
Provisions specific to institutional investors
Currency-matching regulations on assets/liabilities compositionThere are prudential limits established by the Superintendency of Financial Institutions.
Other controls imposed by securities lawsNo.
Changes During 1999
Exchange arrangementJuly 11. The rate of devaluation of the córdoba against the dollar was reduced to an annual 9% from 12%.



November 1. The rate of devaluation of the córdoba against the dollar was reduced to an annual 6% from 9%.
Imports and import paymentsJanuary 1. The maximum import tariff was reduced to 15%.



July 1. The maximum import tariff was reduced to 10%.



November 30. An additional 35% import duty was imposed on imports from Honduras and Colombia.

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