Chapter

BURUNDI

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
Share
  • ShareShare
Show Summary Details
Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Burundi is the Burundi franc.
Exchange rate structure
DualEffective November 12, 1999, there are two foreign exchange markets. The first market (the Bank of the Republic of Burundi (BRB) window) comprises export proceeds from coffee, cotton, and tea, which amount to about 95% of the total export proceeds. The second market (the second window) is operated by foreign exchange bureaus.
Classification
Managed floating with no preannounced path for the exchange rateThe Burundi franc was pegged to a basket of currencies of Burundi’s main trading partners through June 30, 1999. Since then, the exchange rate of the Burundi franc has been de facto managed to limit the spread between the official exchange rate and the parallel market rate. Thus, Burundi’s exchange rate arrangement has been reclassified to the category managed floating with no preannounced path for the exchange rate from the category conventional pegged arrangement. The BRB quotes the exchange rate for 15 currencies, the euro, and the SDR.



Effective November 12, 1999, foreign exchange bureaus were allowed to officially operate in the foreign exchange market, creating a second foreign exchange market with a freely determined exchange rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketn.r.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements relating to trade with the Democratic Republic of the Congo and Rwanda in products specified in the commercial agreements with these countries are effected through a clearing process, with balances paid in convertible currencies. Nonresidents staying in a hotel or guesthouse in Burundi must pay their hotel bills by selling convertible currencies or by using a credit card. Payment in Burundi francs is, however, acceptable in the case of guests for whom a resident company or individual has assumed responsibility with prior authorization from the BRB and in the case of nationals of the Democratic Republic of the Congo and Rwanda, who produce declarations of means of payment issued under the auspices of the CEPGL.
Payment arrangements
Bilateral payment arrangements
OperativeThere are trade agreements with the Democratic Republic of the Congo and Rwanda. These agreements are not fully operational due to the unfavorable economic situation.
Regional arrangementsRegional agreements exist with Eastern and Southern African countries.
Clearing agreementsClearing agreements exist with members of COMESA and CEPGL.
Administration of controlControl over foreign exchange transactions and foreign trade is vested in the BRB; authority to carry out some transactions is delegated to seven authorized banks. Effective November 12, 1999, the BRB issued regulations permitting foreign exchange bureaus to operate officially. Transactions above $5,000 are subject to approval based on the production of supporting documentation.
International security restrictionsNo.
Payment arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeHolders of gold mining permits issued by the ministers responsible for mining and customs may open purchasing houses for gold mined by artisans in Burundi. Gold produced by artisans may be sold only to approved houses.
Controls on external tradeExports of gold must be declared in Burundi francs at the average daily rates communicated by the BRB. Gold exports are authorized jointly by the mining and customs departments.
Controls on exports and imports of banknotes
On exports
Domestic currencyAll travelers may take out up to FBu 5,000.
Foreign currencyIf the amount exceeds $5,000, a license based on supporting documents is required.
On imports
Domestic currencyTravelers may bring in up to FBu 5,000.
Foreign currencyTravelers may bring in any amount of foreign currency quoted by the BRB in addition to traveler’s checks.
Resident Accounts
Foreign exchange accounts permittedEffective November 12, 1999, the regulation pertaining to foreign exchange bureaus and foreign exchange accounts authorized resident natural persons or legal entities to open foreign exchange accounts with local banks. Foreign exchange accounts may be credited freely. Withdrawals of Burundi francs are unlimited. Supporting documentation is not required for withdrawals of foreign exchange in the form of banknotes, traveler’s checks, or checks up to the equivalent of $5,000 per operation. Supporting documentation is required for transactions involving payments for imports of goods and services, withdrawals of banknotes, traveler’s checks, or checks in excess of $5,000. Foreign exchange accounts may bear interest freely.
Held domesticallyAuthorized banks may freely open foreign exchange accounts, but must forward copies of relevant documents to the BRB.
Held abroadPrior BRB authorization is required to open these accounts.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedEffective November 12, 1999, any nonresident natural or juridical person may open a foreign exchange account in an authorized bank. Nonresident foreign exchange accounts may be credited freely. Supporting documentation justifying the nature of the transaction is required for all forms of payments or transfers by residents. These accounts may bear interest freely. Amounts of less than or equal to $5,000 may be withdrawn in banknotes on presentation of travel documentation. Withdrawals in excess of this amount require supporting documentation.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Advance import depositsThe advance import deposit, which was suspended on March 1, 1999, was 50% of the import value, with the exception of key products, which were subject to a rate of 25%, and oil products and those imported by Brassière et Limonadière du Burundi, which were subject to a rate of 10%.
Documentation requirements for release of foreign exchange for importsIn the base of imports financed at the primary window, the task of verifying import declarations and payments by commercial banks requires prior approval of the BRB. All goods imported into Burundi must be insured by approved Burundi insurers, and premiums must be paid in Burundi francs.
Preshipment inspectionAll consignments of imports exceeding $5,000 c.i.f. in value may, in principle, be subject to preshipment inspection with regard to quality, quantity, and price by an international supervising and oversight organization on behalf of the Burundi authorities.
Letters of creditYes.
Import licenses used as exchange licensesYes.
Import licenses and other nontariff measuresVerification of import declarations at the primary window takes into account the available foreign exchange and the level of market supply.
Positive listThese imports must pass through the primary window.
Negative listImports on this list may not be traded at the official exchange rate.
Open general licensesYes.
Import taxes and/or tariffsBurundi is a member of the COMESA. There are five customs duty bands (10%, 12%, 15%, 40%, and 100%) applied to imports from countries not belonging to COMESA. Imports of petroleum products are subject to import duties ranging from 6% to 40%. A 6% service tax, which replaced the statistical tax, is levied on the c.i.f. value of imports, in addition to any applicable customs duties and fiscal duties.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExport proceeds must be collected within 30 days of the date of export declaration at customs for shipment by air or within 90 days for all other shipments. Deadlines for the collection of proceeds from exports of nontraditional products are set by the commercial bank carrying out the operation.
Surrender requirementsAll proceeds from traditional exports must be surrendered to an authorized bank. Exporters of nontraditional products may retain 100% of proceeds. Exporters operating in the free trade area are not required to surrender their export proceeds to an authorized bank. Effective November 12, 1999, only proceeds from exports of coffee, tea, and cotton are required to be surrendered to the BRB.
Financing requirementsNo.
Documentation requirements
GuaranteesYes.
Export licensesYes.
Export taxesExport taxes are levied on a range of exports. The generally applicable rate is 5%. For green coffee, the rate is set at each crop season. The export tax on coffee is 31%.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll payments for invisibles in excess of $5,000 require approval. Effective November 12, 1999, foreign exchange bureaus are authorized to administer payments for invisible transactions.
Trade-related paymentsShipping insurance on coffee exports normally must be taken out in Burundi francs with a Burundi insurer.
Prior approvalYes.
Indicative limits/bona fide testUnloading and storage costs are limited to amounts indicated by the invoice.
Investment-related paymentsPrivate joint-stock companies may transfer 100% of the return on foreign capital and of the share allocated to foreign directors after payment of taxes. Airlines are authorized to transfer abroad 100% of their earnings after deduction of local expenses. Transfer of rental income is permitted (after payment of taxes and a deduction of 20% for maintenance expenses). Transfers for income from rents and sale of real estate are suspended.
Prior approvalYes.
Indicative limits/bona fide testInformation is not available on payments of interest.
Payments for travelCommercial banks and the BRB grant foreign exchange for private and public travel, respectively.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal paymentsCommercial banks grant foreign exchange for personal payments within the limits of their available foreign exchange. Pension transfers are effected through the Social Security Institute.
Prior approvalYes.
Quantitative limitsThe limit for medical costs is FBu 700,000, with additional transfers allowed upon presentation of invoices. For studies abroad and for family maintenance and alimony payments, allowances are suspended.
Indicative limits/bona fide testYes.
Foreign workers’ wagesTransfers are covered on the second market except for those workers who have government contracts.
Prior approvalYes.
Quantitative limitsUpon presentation of evidence of payment of taxes, foreign nationals residing and working in Burundi are permitted to transfer abroad up to 70% of their net annual income (80% in the case of foreign nationals working for companies that export at least 50% of their production).
Indicative limits/bona fide testA work contract is required.
Credit card use abroadThe use of credit cards is not permitted.
Other payments
Prior approvalYes.
Quantitative limitsConsulting and legal fees are limited to amounts indicated by invoices.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsYes.
Capital Transactions
Controls on capital and money market instrumentsCapital transfers abroad by residents require individual authorization.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsThe purchase must be effected in foreign exchange.
Purchase abroad by residentsYes.
Bonds or other debt securities
Purchase abroad by residentsYes.
On money market instruments
Purchase abroad by residentsBRB authorization is required.
On collective investment securities
Purchase abroad by residentsBRB authorization is required.
Controls on derivatives and other instrumentsn.r.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentThe provision of foreign exchange for outward direct investments is suspended. Even with the emergence of the free foreign exchange market, banks are not authorized to sell foreign exchange for outward direct investments.
Inward direct investmentYes.
Controls on liquidation of direct investmentTransfers of foreign capital on which a repatriation guarantee has been granted do not require individual authorization.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsPurchases must be effected in foreign exchange.
Sale locally by nonresidentsTransfer of the proceeds from the sale of real estate is suspended unless the purchaser is the holder of an adequately funded foreign exchange account.
Controls on personal capital movements
Loans
By residents to nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsn.r.
Transfer of assets
Transfer abroad by emigrantsYes.
Transfer into the country by immigrantsYes.
Transfer of gambling and prize earningsn.r.
Provisions specific to commercial banks and other credit institutions
Lending locally in foreign exchangeYes.
Purchase of locally issued securities denominated in foreign exchangen.r.
Differential treatment of deposit accounts in foreign exchange
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsYes.
Credit controlsDebit balances are not permitted on foreign exchange accounts.
Investment regulations
Abroad by banksPrior approval of the BRB is required.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsn.a.
Changes During 1999
Exchange arrangementJuly 1. The exchange rate arrangement has been reclassified to the category managed floating with no preannounced path for the exchange rate from the category conventional pegged arrangement.



November 12. Foreign exchange bureaus were allowed to officially operate in the foreign exchange market, creating a second foreign exchange market with a freely determined exchange rate. Transactions above $5,000 are subject to approval based on supporting documentation.
Arrangements for payments and receiptsNovember 12. Foreign exchange bureaus were allowed to officially operate with a freely determined exchange rate. Transactions above $5,000 are subject to approval based on supporting documentation.
Resident accountsNovember 12. The BRB allowed residents to keep foreign exchange deposits in domestic commercial banks.
Nonresident accountsNovember 12. The BRB allowed residents to keep foreign exchange deposits in domestic commercial banks.
Imports and import paymentsMarch 1. The advance import deposit requirement was suspended.
Exports and export proceedsNovember 12. Only proceeds from exports of coffee, cotton, and tea must be surrendered to the BRB.

    Other Resources Citing This Publication