Chapter

PORTUGAL

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: September 12, 1988.
Exchange Arrangement
CurrencyEffective January 1, 1999, the currency of Portugal is the euro. In cash transactions, however, the legal tender remains the Portuguese escudo until 2002, when euro banknotes and coins will be issued.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderPortugal participates in a currency union (EMU) comprising 11 members of the EU: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Internal conversion rates in respect to the national currencies of EMU participants were fixed to the euro on January 1, 1999, whereas the external exchange rate of the euro is market determined. The conversion rate between the euro and the Portuguese escudo was set at Esc 200.482 per €1. The ECB has the right to intervene to smooth out fluctuations in external exchange rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangementsNo.
Administration of controlThere are no exchange controls. Foreign trade policy is implemented by the Ministry of Economy, which is responsible for administering trade controls and for issuing import and export licenses, declarations, and certificates.
International security restrictions
In accordance with Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsIn compliance with UN Security Council resolutions and EU regulations, certain restrictions have been imposed on the making of payments and transfers for current international transactions with respect to Iraq, the Taliban (the Islamic State of Afghanistan), the Federal Republic of Yugoslavia (Serbia/Montenegro), and the UNITA movement in Angola.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)A customs declaration is required for amounts exceeding Esc 2.5 million.
Controls on exports and imports of banknotesThe exportation or importation by residents or nonresidents of banknotes or coins and traveler’s checks exceeding the equivalent of Esc 2.5 million must be declared to customs.
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 accountsYes.
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 importsNo.
Import licenses and other nontariff measures
Negative listImports of certain products are subject to an import license and are allowed under specific conditions, or are prohibited for reasons of health, public order, or the prevention of commercial fraud. For agricultural products covered by the CAP, an import certificate may be required. A few industrial products, such as steel products and some textiles and clothing, are subject to EU import restrictions when they originate in certain third countries. A more extensive restricted list applying to China includes some textiles and a small number of finished products.
Open general licensesProducts of dual use may require a certificate.
Licenses with quotasImports subject to quantitative restrictions require an import license. Generally, licenses are valid for six months for customs clearance purposes.
Other non tariff measuresFor products under EU surveillance, the appropriate import documents, when required, are issued for statistical purposes and are granted automatically in four or five days.
Import taxes and/or tariffsYes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasFor agricultural products covered by the CAP, an export certificate may be required. Products of dual use may require a certificate.
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.
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsUntil March 1, 2000, when they were lifted, controls were applied on the introduction of foreign securities issued by residents of a non-EU member country that were not quoted on a recognized market of the issuer’s country or of the country in which they were issued.
Bonds or other debt securities
Sale or issue locally by nonresidentsUntil March 1, 2000, when they were lifted, controls were applied on the introduction of foreign securities issued by residents of a non-EU member country that were not quoted on a recognized market of the issuer’s country or of the country in which they were issued.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentInvestments are permitted in all sectors except those that, under general law, are closed to private enterprise corporations. Foreign investments should be registered within 30 days after the operation has been made. Projects of special interest to the Portuguese economy are covered by a separate and contractual regime.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Open foreign exchange position limitsThe prudential minimum own-funds requirements are applied on a nondiscriminatory basis.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidents and on portfolio invested abroadOn April 30, 1999, a maximum limit of 10% on nonresident stocks quoted in stock markets of EU member countries was allowed.
Limits (max.) on portfolio invested abroadYes.
Limits (min.) on portfolio invested locallyOn April 30, 1999, a minimum limit of 50% investment in Portuguese public debt securities with a maturity of over one year was allowed.
Currency-matching regulations on assets/liabilities compositionThere is a requirement of 80% of currency matching of assets owned by insurance companies.
Other controls imposed by securities lawsThe MOF issues regulations on the eligible assets of insurance companies and pension funds and of securities investment funds.
Changes During 1999
Exchange arrangementJanuary 1. The currency of Portugal became the euro. The exchange rate of the escudo was fixed irrevocably at Esc 200.482 per €1.
Capital transactions
Provisions specific to institutional investorsApril 30. A minimum limit of 50% investment in Portuguese public debt securities with maturity of over one year was allowed.



April 30. A maximum limit of 10% on nonresident stocks quoted in stock markets of EU member countries was allowed.
Changes During 2000
Capital transactions
Controls on capital and money market instrumentsMarch 1. Controls were lifted on the introduction of foreign securities issued by residents of a non-EU member country that were not quoted on a recognized market of the issuer’s country or of the country in which they were issued.

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